Risk domains

Sharing collateral can make trading more capital-efficient, but it also creates a financial connection between markets. A loss in one position may consume collateral that supports another.

Novrinex makes that connection explicit through risk domains. A domain groups markets that are allowed to share a defined set of collateral, margin rules, insurance, and loss mechanisms.

What belongs to a domain

A risk domain identifies its eligible collateral and admitted markets. It also defines whether positions use isolated or cross-margin, the position and open-interest limits, the required oracle policy, and the accounts that provide insurance and liquidation backstop capacity.

Every trading subaccount belongs to one domain. The same owner can enter several domains through separate subaccounts, but their financial state does not merge.

Why markets are separated

Markets differ in liquidity, volatility, trading hours, price-source quality, and the chance of a sudden gap. Treating their collateral and insurance as interchangeable would let a weak market pass its losses to participants who never traded it.

A domain of liquid, closely related markets can use cross-margin under one conservative policy. A new or specialized builder market can begin in an isolated domain with its own insurance and lower exposure limits.

The boundary tells a trader exactly which positions can affect the capital supporting another position.

Cross-margin inside a domain

Cross-margin adds the collateral and unrealized profit or loss of compatible positions inside one subaccount. The combined equity is compared with their total initial or maintenance requirements.

Collateral is counted once. An asset held in another domain is unavailable, even when it has the same symbol and owner.

Insurance and losses

The domain names the insurance account and backstop used when a liquidation cannot close cleanly through the order book. Any final ADL process also remains within the affected domain.

Ordinary transfers cannot move insurance or collateral across the boundary. A separate authorized protocol action is required to change the resources assigned to a domain.

Builder exchanges

Each builder exchange receives a dedicated risk domain, PnL pool, fee collector, funding-residual account, insurance account, and liquidation backstop.

Traders opt in by opening a subaccount inside that domain. The builder operates its markets and can receive an agreed fee share, but cannot access trader balances or insurance belonging to another exchange.

Builder markets begin with bounded position and open-interest limits. Growth follows defined review and increase rules, allowing the market’s financial capacity to expand alongside its liquidity and insurance.