> For the complete documentation index, see [llms.txt](https://docs.symm.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.symm.io/options-protocol-architecture/technical-architecture/collateral-and-margin-system.md).
# Collateral & Margin System
### Collateral management
Symmio runs two margin systems to manage risk and keep counterparties solvent.
#### 1. Isolated margin
* Used only for PartyA option purchases.
* PartyA's funds go into an individual isolated balance, managed per user.
* PartyB keeps enough collateral in its own isolated balance to cover the total unrealized PnL of all open positions across all PartyAs.
* The required collateral is set by the *loss coverage ratio*, which defines what percentage of unrealized losses must be backed by actual funds.
* Solvency checks for PartyB run only against its isolated balance, aggregated across all counterparties (not per PartyA).
* If PartyB's available balance falls below the required threshold, liquidation is triggered.
* The Scheduled Release Balance System governs how and when deposited funds become available, adding timed delays for security.
#### 2. Cross margin
* Available for both buying and selling by PartyA.
* Each PartyA and PartyB keeps a dedicated cross balance per counterparty pair.
* This model covers PartyA's maintenance margin (when selling options) and PartyB's loss coverage (when PartyA is the buyer).
* Funds can be allocated from the isolated balance into a cross balance specific to a trading counterparty.
* Solvency and liquidation are pair-specific: they apply only to the trades and margin balances between a particular PartyA and PartyB.
* PartyA must keep enough maintenance margin in its cross balance with PartyB to support short positions.
* PartyB must allocate enough funds in the cross balance with PartyA to cover the required unrealized PnL.
* PartyB also gets a dedicated *reserve balance*: a fail-safe collateral source that can top up a cross balance and prevent liquidation when the account is at risk.
### Scheduled Release Balance System
The Scheduled Release System is a contract-based balance manager that handles funds with time-delayed releases and multi-counterparty support. It works with both the isolated and cross-margin models and their locking mechanisms, and it:
* Controls fund release and transfers between parties.
* Adds security delays so funds aren't immediately available.
* Reduces the risk of rapid fund movements.
* Provides different behavior for isolated vs. cross margin.
**Balance types**
1. **Isolated balance:** the user's main balance pool, used in isolated solvency checks.
2. **Cross balance:** per-counterparty balance for cross-margin operations and solvency checks.
3. **Scheduled balance:** time-locked funds awaiting first release.
4. **Transitioning balance:** funds in the second phase of the release process.
**Margin types**
* **Isolated margin:** uses the scheduled-release mechanism with time delays.
* **Cross margin:** direct balance operations without delays.
#### Isolated balance functions
* `instantIsolatedAdd()`: immediately adds funds to a party's isolated balance.
* `isolatedSub()`: subtracts funds from the isolated balance.
* `isolatedLock()` / `isolatedUnlock()`: lock or unlock portions of the isolated balance.
#### Cross balance functions
* `allocateBalance()`: transfer funds from isolated to cross balance for a specific counterparty.
* `deallocateBalance()`: transfer funds from cross balance back to isolated balance.
* `crossLock()` / `crossUnlock()`: lock or unlock portions of the cross balance.
#### Scheduled release functions
* `scheduledAdd()`: add funds with a time-delayed release (the delay is a security measure).
* `subForCounterParty()`: subtract funds from balances for a counterparty, not just the isolated balance.
#### Release mechanism
The system uses two release intervals:
1. **Release Interval 1:** Scheduled Balance to Transitioning Balance.
2. **Release Interval 2:** Transitioning Balance to Isolated Balance.
The `sync()` function must be called to move funds through the intervals. It checks elapsed time for each balance bucket, moves funds from Scheduled to Transitioning when interval 1 expires, and from Transitioning to Isolated when interval 2 expires.
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