What is Collateral?

Collateral (margin) is the capital you lock to open a leveraged position and keep it solvent. Profits add to it; losses are deducted from it.

Most perp venues settle in USDC or USDT, though some use the base asset. The collateral type matters for cross-venue arbitrage because converting between stablecoins or chains adds friction.

Cross-margin shares one collateral pool across all positions; isolated margin walls off collateral per position so one liquidation can’t cascade into others — often the safer choice for multi-leg arbitrage.