Spot Margin
Backpack offers a Spot Margin trading product that empowers you to go long or short on spot assets beyond current wallet balances. Behind the scenes this system leverages Backpack’s real-time liquidation engine and the transparent borrow & lending market to enable capital-efficient spot trades. All spot margin positions on Backpack tap into the same lending pools and are subject to the same margin requirements and liquidation processes that govern the broader borrow & lending framework.
This ensures that:
You can automatically borrow the assets you need to complete a spot trade.
Borrowers are always sufficiently collateralized, with the platform liquidating positions if necessary.
Enabling Spot Margin
Before placing a margin trade, you need to ensure Margin Trading is enabled in the subaccount’s settings. With Auto Lend on, you can borrow via spot margin trades without needing to create manual loans—Backpack automatically borrows on your behalf whenever you trade beyond your spot balances.
Margin Trading
Spot Margin allows you to buy or sell an asset in amounts exceeding your available balance, seamlessly creating a borrow for the shortfall (or withdrawing the borrowed asset if you want to transfer it off-exchange).
Example:
Enable Margin in your order form.
Place a Buy or Sell order for the desired asset in the spot market.
If you sell more than you hold (short selling) or buy more than your balance can cover, the system borrows on your behalf.
Example:
You have 1,000 USDC but want to buy 2,000 USDC worth of SOL.
By checking the “Margin” box, Backpack automatically borrows the extra 1,000 USDC and completes your spot purchase.
You now have a long SOL position financed by a partial borrow.
Repaying Margin Trades
When you owe a certain asset due to a spot margin borrow, you can repay in the following ways:
Auto-Repayment with Auto Lend
If Auto Lend is enabled, any matching assets you acquire in your subaccount (via deposits, trades, or conversions) immediately go toward paying down your debt.
Spot Margin
Simply buy back the asset you owe. For instance, if you are short 10 SOL, placing a margin-enabled BUY for 10 SOL will automatically repay your SOL debt.
Manual Repayment
If Auto Lend is disabled, visit the Borrow tab (or the Borrow modal) and click Repay. Any assets you hold that match the borrowed asset can be used to repay.
Margin Requirements & Collateral
Spot Margin on Backpack uses the same cross-margin system as the rest of the exchange, meaning:
Collateral is calculated from all assets in your subaccount, each with its own “haircut” (collateral weight).
Maintenance Margin is monitored in real time. If your margin fraction (collateral vs. open positions) dips below the required threshold, liquidation is triggered.
Key Points
Initial Margin: The collateral you need to open a position.
Maintenance Margin: The collateral you need to keep that position open without liquidation.
Position Size: For spot margin, your short or overbought balances count toward your total exposure.
Why You Can’t Always Use Full Leverage
Your maximum position size depends on:
Collateral Haircuts (some assets count less toward collateral due to higher volatility)
Borrowing Pool Liquidity (there must be enough supply for you to borrow)
Available Equity in your subaccount
This means it’s not as straightforward as a simple “balance × max leverage” calculation.
Example
Suppose you have 100 USDC in your subaccount and the system allows 10× max leverage. Theoretically, you might assume you can buy $1,000 of SOL.
USDC is considered high-quality collateral (minimal haircut).
SOL may have a lower collateral weight (a “haircut”) due to higher volatility.
When you trade USDC for SOL, your collateral composition changes from “good collateral” to “riskier collateral.” As a result, the margin engine may limit your final position to, say, $800 of SOL, ensuring you retain enough stable collateral to cover potential volatility in SOL’s price.
For further details, refer to the Margin section.
Utilization & Interest Rates
Spot margin borrowing relies on the same borrow & lending framework as standard manual borrows. This means:
Utilization Rate = Total Borrowed / Total Lent.
Borrow Rate: Determined by the market’s Utilization Curve. Higher utilization means higher borrowing costs.
Lend Rate: Equal to Borrow Rate × Utilization. Lenders earn more yield as the pool’s utilization grows.
Because spot margin taps into the same pool, your borrow is subject to the hourly interest charges outlined in the borrow & lending doc. You can track real-time utilization and interest rates on the Lend page for each asset.
Last updated