Proof of Margin

Context

Proof of Margin (PoM) represents a mechanism designed to verify the sufficiency of collateral backing derivative positions, particularly within decentralized cryptocurrency exchanges and options platforms. It diverges from traditional centralized margin systems by leveraging on-chain data and smart contracts to autonomously assess and enforce margin requirements. This approach aims to enhance transparency and reduce counterparty risk inherent in over-the-counter (OTC) derivatives trading, fostering a more robust and trustless environment. PoM protocols typically involve continuous monitoring of user balances and positions, triggering automated liquidations when margin thresholds are breached.