How Does Pre-Funded Margin Differ from Traditional Post-Trade Margin Calls? ⎊ Path

How Does Pre-Funded Margin Differ from Traditional Post-Trade Margin Calls?

Pre-funded margin is capital locked into the smart contract before the trade to cover all potential future obligations. Traditional post-trade margin calls occur after a position has incurred losses, requiring the counterparty to manually deposit additional funds.

Smart contracts automate the entire process, eliminating the manual margin call and the risk of a party failing to meet it. This results in instant risk mitigation and continuous solvency on-chain.

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