> For the complete documentation index, see [llms.txt](https://docs.reya.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.reya.xyz/trading/cross-margining.md).

# Cross-margining

One of Reya’s fundamental innovation is a system for full cross-margining of positions, made possible by the extensive liquidation engine and its innovative waterfall structure. Reya Network’s margin system has a holistic view of a traders portfolio. This means when setting margin requirements, it takes into account that certain positions in a portfolio can win when others lose, in effect reducing the aggregate losses that a portfolio as a whole can suffer. As a result, a trader would need to deposit less capital as margin for those aggregate losses. Cross-margining is the system of accounting for these synergies in the portfolio and consequent margin savings.

In particular, cross-margining enables very capital efficient relative value (long-short) trades. While it is completely fair to trade on whether a given token will go up or down, whether a given project is winner or a loser, more often than not, true trading opportunities are in betting on whether two projects will converge or diverge relative to one another. By longing one and shorting the other, a trader stands to gain precisely with those movements, irrespective of whether the market as whole goes up or down.

Using two-year data up until December 31, 2023 and a preliminary margin model, Reya’s cross-margining system would have resulted in >350% more capital efficient ETH-BTC spread trading.

Margin efficiencies are the cornerstone for capital efficiency and are essential for market makers, as they accumulate large portfolios with many offsetting pieces. By recognizing them, cross-margining frees up market makers' capital to quote more liquidity on the order book.