In cross-currency margin mode, when unrealized losses from contract positions create liabilities in a specific currency account, the system may trigger automatic currency exchange to repurchase the indebted currency and reduce liability values.
How Automatic Currency Exchange Works
Two-Step Conversion Process:
- Positive-asset currencies are first sold for USDT.
- USDT is then used to repurchase the indebted currency.
👉 Why USDT is used as the intermediary
Priority Selection for Positive-Asset Currencies:
- Tier-1 Conversion Rate Priority: Lower conversion-rate currencies are used first (minimizing equity impact). Currencies with 0% rates are excluded.
- Liquidity Priority: Among equal-rate currencies, those with better liquidity are prioritized to reduce slippage losses.
Example Scenario:
For a BTC debt with ETH/DOT/BSV/CVC holdings:
- CVC (0% rate) is excluded.
- Among DOT/BSV (both 0.9 rate), DOT is selected if it has better liquidity.
Key Operating Modes
1. Non-Auto Borrowing Mode
Triggers when liabilities exceed interest-free allowances. The system converts positive assets via USDT to cover debts.
Example:
- User holds 1 BTC (1 BTC interest-free allowance) and 10,000 ETH.
- After a 2 BTC loss, 1 BTC debt remains interest-free.
- If losses reach 3 BTC, ETH worth ~0.5 BTC is exchanged to reduce BTC debt below the allowance.
2. Auto-Borrowing Mode
Normally, only interest accrues beyond allowances. Automatic exchange activates when platform-wide debt hits risk limits, prioritizing high-liability accounts.
Case Study:
| User | Contract Loss | Debt Tier | Action Taken |
|------|--------------|-----------|--------------|
| A (No contracts) | - | - | Excluded |
| B | 9.5 BTC | Tier 10 | Repurchased 0.5 BTC |
| C | 10.5 BTC | Tier 11 | Repurchased 0.8 BTC |
| D | 10.8 BTC | Tier 11 | Repurchased 1 BTC |
👉 Learn how tiered adjustments work
Frequently Asked Questions
Q: Which currencies are excluded from automatic exchange?
A: Currencies with 0% conversion rates (e.g., CVC in the example).
Q: How does liquidity affect currency selection?
A: Higher-liquidity currencies minimize slippage, making them preferable for exchanges.
Q: When does auto-borrowing mode trigger exchanges?
A: Only when platform-wide debt breaches risk thresholds, targeting high-tier accounts first.
Q: Are leveraged trading positions affected?
A: No—only contract position losses trigger exchanges.
Q: How are interest-free allowances applied?
A: They cap interest-free liabilities; exchanges activate to maintain debts within this limit.
Q: Can users control the exchange process?
A: No, it’s fully automated based on predefined risk parameters.
This overview clarifies OKX’s automated mechanisms for maintaining account stability during market volatility. For real-time updates, refer to official announcements.