What Is the Function of an On-Chain Margin Account for Derivatives Trading?
An on-chain margin account is a smart contract that holds the collateral (cryptocurrency or tokenized assets) required to support a derivatives position. It automatically monitors the position's value and enforces margin requirements.
If the position moves against the trader, the smart contract can automatically trigger a margin call or liquidation using pre-programmed rules. This replaces the traditional manual process and reduces settlement risk.
