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How Do Decentralized Exchanges (DEXs) Handle Collateral and Margin for Perpetual Futures Trading?

Smart contracts manage collateral (stablecoins) in a non-custodial vault, automatically enforcing margin and liquidation rules on-chain.
Greeks.Live14.11.25

How Do Decentralized Exchanges (DEXs) Handle Collateral and Margin for Perpetual Futures Trading?

DEXs manage collateral and margin through smart contracts in a non-custodial manner. Traders deposit collateral, typically stablecoins or a supported cryptocurrency, into a smart contract vault.

The contract then manages the margin requirements, automatically calculating the Maintenance Margin and initiating liquidations if the collateral value drops below the required threshold. This process removes the need for a centralized intermediary to hold user funds, adhering to the principles of decentralized finance.

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