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4. Cross-margin: what it is and what it eats?

This piece is written by @PonyFresh🔓 from Phezzan Discord server
In order for users to have an understanding of the internal processes of the protocol, it is necessary to know the methods and principles by which it operates.
Cross-Margin is the process of offsetting positions whereby excess margin from a trader's margin account is transferred to another of his margin accounts to meet the requirements of supported margin. The main difference with the isolated margin is that the isolated margin takes into account only the trading pair in question for liquidation calculation. The crossed margin facilitates the trader to use his available margin balance in all of his accounts.
In the late 1980s, when the growth of financial instruments met with increased market volatility, the use of cross-margin began to increase a firm's liquidity and funding flexibility by lowering margin requirements and reducing net settlements.
In fact, it also prevents unnecessary liquidation of positions and, as a result, likely losses. A cross-margin system links margin accounts so that margin can be transferred from accounts that have margin overruns to accounts that require margin. This is very convenient.
It is also worth noting that it is a good risk management tool that prevents unnecessary liquidation of positions.
Example: A trader has $100 bitcoins with x20 leverage and $100 Ethereum with x20 leverage. So there is the equivalent of 2000 USDT BTC and 2000 USDT ETH on positions. The cross margin works like this. Let's say further a trader's bitcoin loses 10% of its value and Ethereum stands still, you lose 10% of $2,000 or $100. But since the margin is crossed, your margin is $200. You are not liquidated. He needs to wait for bitcoin to fall 20% to get your $200 deposit and liquidate your two BTC-USDT and ETH-USDT positions. A 10% drop in bitcoin and Ethereum would also eliminate both of your positions.
And what is the advantage of a cross margin account?
This is useful in volatile markets where there are extreme fluctuations that make it difficult to assess the predictability of margin requirements. This is especially true for long-term strategies implemented by traders and investment funds.