Isolated Margin Engines

Isolated Margin Engines restrict the collateral allocated to a specific position to a predetermined amount. If the position loses value and hits the liquidation threshold, only the collateral assigned to that specific trade is at risk, while the rest of the user account remains unaffected.

This compartmentalization is preferred by traders who want to limit their downside risk for specific strategies or volatile assets. It provides a clear boundary for potential losses, making it easier to manage risk in complex portfolios.

The protocol manages each isolated position as a separate sub-account within the risk engine, ensuring that liquidation events do not cascade into other parts of the user portfolio. This is a foundational risk management tool in high-leverage crypto trading.