A mark does not repay a loan.
A displayed midpoint can be useful to a trader, but it is not cash that can repay debt. Axient’s reference model values a position through the cumulative proceeds that its actual quantity could obtain on the connected venue, net of costs required before repayment.
Entry and exit are different functions
Aₜ(q) is the settled cost of acquiring q tokens at time t, including entry fees, impact, and allocated settlement costs.Bₜ(x; q) is the settled net proceeds from selling x tokens out of a held position q, after venue fees, execution costs, and any explicit execution reserve.- The full executable liquidation value is
Vₜ(q) = Bₜ(q; q).
The model deliberately does not replace Vₜ(q) with quantity times midpoint. On a thin book, the two values can differ materially.
Settled, not matched
An order can be submitted, acknowledged, or matched before asset and cash transfers are final. Debt-clearing accounting uses settled proceeds only. This avoids recording a reduction in debt before the venue’s settlement rules confirm that the corresponding cash is available.
Coverage and buffers
The reference accounting separates free cash K, executable liquidation value V, debt D, and a forward-looking buffer M. It defines:
- Executable equity:
E = K + V − D
- Health factor:
HF = (K + V) / (D + M)
The buffer can cover maintenance margin, expected execution uncertainty, settlement latency, concentration, and operational risk. A maintenance action may seek to restore a buffer; hard-flat has a narrower objective: clear the debt before the venue closes.
Position controls
The margin layer can apply controls as conditions change:
- Live — a position can be opened, reduced, or closed while the market is active.
- Reduce only — new risk is limited as the market approaches venue close.
- Partial liquidation — risk may be reduced before the finality boundary to restore a safety buffer.
- Hard-flat — the mechanism targets debt elimination, selling only the quantity required when that is feasible.
Depth can disappear, the venue can stop trading early, or settlement can fail. Executable-risk controls are safeguards under their assumptions; they are not a guarantee that hard-flat execution will be possible.