Can Cross-Collateralization Mitigate Margin Call Risks in Crypto Derivatives?

Yes, cross-collateralization can mitigate risk by allowing a trader to use profits or collateral from one derivatives position to offset losses or margin requirements on another. This pooling of collateral across multiple positions provides a larger buffer against adverse price movements in a single asset.

However, it also links the risk of all positions, potentially leading to a larger, simultaneous liquidation if the entire portfolio moves against the trader.