Collateral on FTX is calculated in USD value terms. We follow a multi-currency cross-margining methodology and thereby accept a variety of non-USD assets as collateral for derivatives and spot margin positions. The PnL is always settled in USD regardless of which type of collateral is used.

The user can choose whether to use FTT as collateral on the settings page. By default the account uses FTT as collateral. 

List of Non-USD Collateral

Note: Always use https://ftx.com/api/wallet/coins as the source of truth.

Definitions & Formulas

Examples

Let’s assume you're currently holding the following balances and that spot margin is enabled in your account:

Calculating Total Collateral Value

To start, let's first calculate the Collateral Weight of the assets you're currently holding.

For BTC:

= min (1.1 / [IMF Weight * {1.1 / Total Weight - 1} + 1] , 1.1 / [Spot Margin IMF Factor * sqrt{size} * IMF Weight + 1] )

= min (1.1 / [1 * {1.1 / 0.975 - 1} + 1], 1.1 / [0.002 * sqrt(2.5) * 1 + 1] )

= min (0.975, 1.09653246)

= 0.975

That means that the Collateral Value of your BTC will equal:

$50,000  * 0.975 = $48,750. 

Applying the same formula to the rest of your assets:

Note: In the vast majority of cases, Collateral Weight will simply be either the asset’s Initial Weight or Total Weight, depending on whether you have spot margin enabled or not. However, if you hold a significant balance of a single coin, its Collateral Weight may go down.

As an example, imagine that instead of 2.5 BTC, you're holding 10,000 BTC in your account, which would be equal to $200,000,000 assuming BTC is trading at $20,000. The Collateral Weight for your BTC would be as follows:

= min (1.1 / [1 * {1.1 / 0.975 - 1} + 1], 1.1 / [0.002 * sqrt(10,000) * 1 + 1] )

= min (0.975, 0.9167)

= 0.9167

Assuming BTC is trading at $20,000, the value of your collateral would be 0.9167 * 10,000 * $20,000 = $183,333,333.

Additionally, Collateral Weight can also change depending on the asset's IMF Weight and/or IMF Factor (as illustrated in the formula).

Calculating Free Collateral

Now, let’s calculate Free Collateral to understand how open positions and orders affect your collateral. Assume you have the following positions and open orders in your account:

Note: “Open” in this context means that the order has not been filled yet.

Total Collateral Used is calculated by multiplying the Position Open Size Notional times its IMF. For open spot orders, the Collateral Used will be the full notional size of the order. When we add all of this up, the Total Collateral Used comes out to $35,789.

Before we calculate Free Collateral, keep in mind that the LTC/USD spot margin short position creates a negative LTC spot balance. In addition to requiring margin, negative spot positions also decrease your account collateral value.

In other words, our LTC/USD spot margin short is using $789 in Collateral, and on top of that, you will have an LTC balance of -$5,000. At the same time, your USD balance will increase by $5,000 as well.

To illustrate this, here’s an updated overview of the Total Account Collateral:

Now, to calculate Free Collateral, we simply need to subtract Total Account Collateral - Total Collateral Used:

In conclusion, you have $127,211 in Free Collateral, which can be used to open new positions, transferred, or lent. 

Handling Negative USD Balances

Selling your non-USD collateral

Note: IF YOU DO NOT WANT YOUR ASSETS TO BE CONVERTED TO COVER NEGATIVE USD BALANCES, PLEASE SKIP TO THE NEXT SECTION

For accounts with spot-margin trading disabled, FTX will automatically send market orders to convert the non-USD collateral into USD if the USD balance is negative and any of the following conditions hold:

• You are close to liquidation: your account's margin fraction is less than 20bps + maintenance margin fraction requirement
• Your negative USD balance is over $30,000 in magnitude
• Your negative USD balance is over 4 times larger than your net account collateral

FTX will prioritize conversion to USD based on the collateral quality of the asset as measured by the Total Weight. For the assets that carry the same Total Weight, the asset with the higher notional USD value will be converted first. Note that FTT collateral is always used last.

For example, if both BTC and USDT are eligible choices, FTX will choose the larger balance in USD terms. As an illustration, if you have $1000 of USDT and $100 of BTC, the USDT will be traded into USD first. 

Note that collateral conversions will potentially top you up so that you have slightly more than zero USD left by converting 10% more than is necessary in case of price movements.

Charging interest instead of collateral converting

Instead of having your collateral converted into USD, you can enable spot margin trading on your account in order to automatically borrow the negative USD balance via the spot margin market and pay the prevailing USD borrow rate. To enable spot margin trading, go to the Margin section on your profile page and click "Enable spot margin trading".

As an example, assume you opened a long futures position and only had BTC as collateral. If your position goes against you, you would have a negative USD balance. At that point, instead of converting your BTC collateral, FTX will use the BTC as collateral to borrow USD from the spot margin market for the amount you’re negative. You will be charged the prevailing USD borrow rate for any negative USD balance. 

How can your USD balance go negative?

Assume you have 110,000 USDT in your account and nothing else and USDT is trading at $1. Let’s say BTC-PERP trading at $20,000 and you open a 50 BTC-PERP long position, making the total position notional equal $1,000,000. 

A few minutes later, the price of BTC-PERP goes down. What happens? Remember that :

1. Your USD balance is $0 (because you used USDT as collateral to open your position)
2. Unrealized PnL affects your USD balance in real time:
   • Unrealized PnL from open futures positions is settled in USD every ~30 seconds. This means that debits or credits are happening on your account as your positions change in value, which ultimately affects your USD balance and collateral. Traders that have a positive PNL can withdraw it, use it to buy spot, lend it out, use it as collateral, etc. as soon as it’s been credited to their account. Trading fees and funding payments also affect your PnL. Also, keep in mind that PnL isn’t realized on spot trades, only derivatives.

   • To calculate your PnL on open positions: 

     • if you bought = position size * (mark price - entry price) 
     • if you sold = position size * (entry price - mark price)

So when the price of BTC-PERP goes down, you start accruing a negative USD balance. 

To illustrate this, say BTC-PERP is now trading at $19,600 and USDT is still trading at $1:

= position size * (mark price - entry price) 

= 50 * ($19,600 - $20,000) = -$20,000

So, your new account balance would be:

• USD = –$20,000
• USDT = 110,000 USDT