What is Collateral?

Before you can place your first margin trade using Coinmetro’s Margin Platform, you need to allocate some funds as Collateral. The maximum collateral on our margin trading platform is currently €50,000.

These funds act as artificial security for the borrowed funds you automatically receive when margin trading. Funds allocated as collateral are locked while selected and cannot be withdrawn or used for any other purpose until the positions are closed. You may immediately release funds from collateral if you have a sufficient free margin. 

Which assets can be used as collateral?

Only certain assets may be allocated as collateral, initially restricted to major assets and fiat currencies. Other fiat currencies and major cryptos will be added in the future.

Here are the currently supported currencies and assets:

• XCM

• GBP

• EUR

• AUD

• USD

• BTC

• ETH

• BCH

• XRP

• LTC

• USDC

Using XCM as Collateral

XCM can now be used as margin collateral. Should you wish to allocate XCM as margin collateral, here are some important things to keep in mind:

• XCM can be added as collateral just as usual

• XCM can make up to 30% of your collateral. For example, if you wanted to allocate 1000 EUR as collateral, you could allocate up to 300 EUR of XCM and at least 700 EUR worth of other assets

• The value applied to XCM will only be 30% of the market value. For example, if XCM is valued at 60c, 20c value will be applied as collateral

• You can add a max of €10,000 worth of XCM as collateral.

Primary Collateral

One of your collateral allocations must be designated as the primary. If you have only allocated one asset as collateral, then that allocation is automatically the primary.

With more than one allocation a primary selector in the collateral panel lets you choose the primary. Closed profits and losses from margin trading are settled to the wallet for the primary and will be automatically added to (or deducted from) the collateral allocation for that asset.

For example, if you allocate 1,000 EUR as your primary collateral, then the profit or loss for any margin trade will be automatically converted to EUR on settlement (when the trade closes), regardless of which pair was traded. Alternatively, if you have allocated BTC or another crypto, as your primary collateral, then all profits and losses from margin trading will be converted to BTC or that crypto, on settlement.  

With multiple collateral allocations, it is possible that a large trading loss could exceed the value of your primary allocation. If this happens the current primary allocation is used to cover part of the loss and the next largest collateral allocation would become the new primary, with any remaining loss being deducted from that.

This process can repeat over multiple collateral allocations until the loss is completely covered.