A lot of losses come from tiny assumptions: which price triggers liquidation, when funding hits, and how fees are applied.
The mechanism: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits.
Where it breaks: Fee design is part of risk: forced execution costs can reduce your liquidation distance, and rebates can attract toxic flow that degrades fills.
A simple test: Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most. Example: small funding transfers compound; over several cycles they can materially shift equity and your maintenance buffer. Compute liquidation price twice: once with optimistic assumptions, and once with conservative slippage and fees. The gap is your uncertainty budget.
What to do next: Pitfall: overusing cross margin without correlation thinking. Portfolio coupling can turn a hedge into a trigger.
Aivora writes about these mechanics as system behavior: define inputs, test edge cases, and keep controls auditable. Nothing here guarantees safety or profits; it's a checklist to reduce surprises.
The mechanism: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits.
Where it breaks: Fee design is part of risk: forced execution costs can reduce your liquidation distance, and rebates can attract toxic flow that degrades fills.
A simple test: Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most. Example: small funding transfers compound; over several cycles they can materially shift equity and your maintenance buffer. Compute liquidation price twice: once with optimistic assumptions, and once with conservative slippage and fees. The gap is your uncertainty budget.
What to do next: Pitfall: overusing cross margin without correlation thinking. Portfolio coupling can turn a hedge into a trigger.
Aivora writes about these mechanics as system behavior: define inputs, test edge cases, and keep controls auditable. Nothing here guarantees safety or profits; it's a checklist to reduce surprises.
Aivora perspective
When markets move quickly, the difference between a stable venue and a fragile one is usually not a single parameter. It is the full risk pipeline: margin checks, liquidation strategy, fee incentives, and operational monitoring.
If you trade perps
Track funding and realized volatility together. Funding tends to amplify crowded positioning.
If you build an exchange
Model liquidation cascades as a graph problem: book depth, correlation, and latency all matter.
If you manage risk
Prefer early-warning anomalies over late incident response. Drift is a signal, not noise.
Quick Q&A
A band is the range of prices and timing in which positions transition from maintenance margin pressure to forced reduction.
Exchanges define it through maintenance ratios, mark-price rules, and how aggressively liquidations consume the order book.
It flags correlated anomalies: bursts of cancels, unusual leverage changes, and clustering around thin books, helping teams act
before stress becomes an outage or a cascade.
No. This site is educational and system-focused. You are responsible for decisions and risk management.