Settlement and Realization

Futures on Backpack settle in USDC. This includes fees, funding payments, and PnL.

If you have USDC in your account, then all USDC settlements will be debited from your USDC balance. However, in the case that you don't have USDC available in your account and therefore owe it to the system, Backpack considers the following options (in order):

1. Redeem any outstanding USDC lends

2. Borrow USDC from the borrow lending pool

3. Convert non-USDC collateral into USDC

This means that you can trade futures without having any USDC in your account.

---

PnL Settlement

PnL on Backpack is settled in real-time. Every 10 seconds, any unrealized profits or losses are realized without affecting your position size. This means your USDC balance is continuously credited or debited as your PnL fluctuates.

This real-time settlement model maximizes capital efficiency. For example, if you have a position with +$1,000 unrealized profit and want to physically use those assets (for spot, withdrawals, etc):

• On traditional crypto exchanges, you would need to close your position to access that $1,000, or borrow against your increased equity.

• With Backpack, that $1,000 profit is immediately credited to your USDC balance, allowing you to use it for spot trading, opening new positions, withdrawing from the exchange, or lending—all without reducing your original position.

To further enhance capital efficiency, if you enable Auto Lend, all profits are automatically lent into the USDC lending pool to earn yield while your position remains open. Importantly, these lent assets still count 100% towards your equity, meaning you can simultaneously earn yield while using those funds to maintain existing positions and open new positions.

The same process applies to losses. When your futures positions experience losses, your USDC balance is debited accordingly. This functions identically to traditional unrealized loss models in terms of liquidation risk—the only difference is in accounting. In both models, losses reduce your account equity, which affects your margin calculations and liquidation thresholds in exactly the same way. Whether your losses are "unrealized" on traditional platforms or "realized" through real-time settlement on Backpack, the risk management mechanics and liquidation parameters remain the same.

If you don't have sufficient USDC collateral and are using other assets (BTC, SOL, ETH, or USDT), the system will automatically create a USDC borrow to cover any losses rather than liquidating your non-USDC collateral.