The Unified Balance Manager (UBM) enables you to hold multiple currencies in your trading wallet and automatically manage conversions and borrowing when needed. This article explains how currency conversions work, when interest charges apply, and how these features help you trade more efficiently.
The Unified Balance Manager is Kraken's centralized balance tracking system that:
✓ Multi-Currency Support: Hold any supported asset as collateral
✓ Automatic Conversions: System converts currencies when needed
✓ Transparent Interest: Clear APR rates displayed upfront
✓ Unified Margin: Use spot assets as collateral for futures positions
✓ Cross-Margining: Offset positions across different markets
When you trade or need collateral in a currency you don't currently hold, the system can automatically convert your available assets. This happens in several scenarios:
Automatic conversion triggers
Manual conversions
You can also initiate currency conversions manually through:
Step-by-Step:
Example:
• You need 1,000 USD but only have EUR in your account
• Your EUR Balance: 950 EUR
• Current EUR/USD Rate: 1.10
• Conversion Spread: 0.25%
• Amount Converted: 950 EUR
• Amount Received: 950 × 1.10 × (1 - 0.0025) = 1,042.38 USD
The system uses two types of exchange rates:
Reference Rates (Preferred)
Reference rates are institutional-grade prices that provide the most stable and fair valuation:
Reference rates are used when:
Mid Rates (Fallback)
Mid rates are calculated from our internal order books:
Mid Rate = (Best Bid Price + Best Ask Price) / 2
To protect against adverse price movements during conversions, a small spread is applied:
Spread Calculation
The conversion spread varies by currency pair and market conditions:
BaseToQuote Conversions:
Converted Amount = Original Amount × Exchange Rate × (1 - Spread%)
QuoteToBase Conversions:
Converted Amount = Original Amount × Exchange Rate / (1 + Spread%)
| Currency Pair Type | Typical Spread |
|---|---|
| Major Fiat Pairs (USD/EUR) | 0,10% - 0,25% |
| Crypto/USD Pairs | 0,25% - 0,50% |
| Crypto/Crypto Pairs | 0,50% - 1,00% |
| Less Liquid Pairs | 1,00% - 2,00% |
Note: Actual spreads may vary based on market conditions, liquidity, and volatility.
Conversion fee structure
Standard Conversions:
Special Cases:
The Unified Balance Manager supports a wide range of currencies for conversions:
Major Fiat Currencies:
Stablecoins:
Cryptocurrencies:
Regional Considerations:
The system includes an intelligent auto-conversion feature to help prevent liquidations:
Auto-conversion trigger
When your collateral value approaches critical levels, the system may automatically convert other assets to the required currency:
Trigger Condition = (USD Balance + Unrealized PnL) < Trigger Threshold
Default Trigger: Typically around 120% of maintenance margin requirements
Conversion priority order
The system converts assets in order of:
Auto-conversion settings
Whitelisted Currencies: Only pre-approved currencies are automatically converted to prevent unwanted liquidation of specific holdings.
Conversion Amount: System calculates the minimum amount needed plus a small buffer:
Conversion Amount = Required Shortfall + Buffer
In the Unified Balance Manager, uncovered losses occur when you have:
Unlike traditional margin borrowing, UBM charges interest on uncovered losses rather than on explicit loans.
Important: Kraken provides a generous interest-free threshold for uncovered losses:
✓ First $30,000 of uncovered losses: NO interest charged
✓ Only amounts above $30,000: Subject to hourly interest charges
Example:
Uncovered loss of $25,000 → $0 interest (below threshold)
Uncovered loss of $45,000 → Interest charged on $15,000 only
Uncovered loss of $100,000 → Interest charged on $70,000 only
This threshold effectively provides $30,000 of interest-free credit to handle temporary losses and market volatility.
You may incur uncovered losses when:
Interest calculation:
Interest is charged only on the amount exceeding your USD balance*
Formula:
Uncovered Loss = -(USD Balance + Unrealized PnL)
Interest-Bearing Amount = max(0, Uncovered Loss)
Hourly Interest = Interest-Bearing Amount × Hourly Interest Rate
Interest rate
Interest accrual and payment
Processing Schedule:
*Certain stablecoins are treated as USD for interest calculation purposes. More details available here.
Payment methods
When hourly interest is due, the system processes payment as follows:
1. Collateral Conversion
2. Increased Uncovered Loss
3. Account Log Entry
Viewing your position
You can monitor your uncovered loss status through:
Key Metrics Displayed:
Reducing or eliminating uncovered losses
Strategies to minimize interest charges:
Automatic loss prevention
When you deposit funds or close positions:
Multi-Collateral wallets
Features:
Best For:
Single-Collateral wallets
Features:
Best For:
Unified margin combines spot and futures positions into a single margin calculation:
Benefits:
Conversions in Unified Wallets:
Scenario:
Process:
1. Trade requires: 0.5 × 50,000 = 25,000 USD
2. Your EUR balance: 2,500 EUR
3. EUR/USD rate: 1.10 (reference rate)
4. Conversion spread: 0.25%
5. EUR converted to USD: 2,500 × 1.10 × 0.9975 = 2,743.13 USD
Result:
Trade proceeds with available USD
Remaining needs borrowed: 25,000 - 2,743.13 = 22,256.87 USD
Loan created: 22,256.87 USD at current APR
Scenario:
Calculations:
Total Uncovered Loss: $50,000
Interest-Free Threshold: $30,000
Interest-Bearing Amount: $50,000 - $30,000 = $20,000
Hourly Interest Charge: $20,000 × 0.0001 = $2.00
After 24 hours: $2.00 × 24 = $48.00
After 7 days: $48.00 × 7 = $336.00
After 30 days: $48.00 × 30 = $1,440.00
Key Point:
Even with $50K uncovered loss, only the $20K above the threshold incurs interest.
Scenario:
Process:
1. Uncovered loss: $40,000
2. Interest-bearing amount: $40,000 - $30,000 = $10,000
3. Hourly interest: $10,000 × 0.01% = $1.00
4. Insufficient USD to pay interest
5. System converts BTC to cover interest:
- USD needed: $1.00
- Conversion spread: 0.25%
- BTC needed: $1.00 / (50,000 × 0.9975) = 0.00002005 BTC
- BTC deducted: 0.00002005 BTC
6. Interest paid: $1.00 USD
7. Remaining BTC: 0.5 - 0.00002005 = 0.49997995 BTC
Scenario:
Result:
Total Uncovered Loss: $25,000
Interest-Free Threshold: $30,000
Interest-Bearing Amount: $25,000 - $30,000 = -$5,000 (negative)
Since the uncovered loss is below $30,000:
→ NO INTEREST CHARGED
You can maintain this position without any interest charges
until the uncovered loss exceeds $30,000.
All conversions and interest payments appear in your transaction ledger with detailed information:
Conversion Entries:
Interest Payment Entries:
Retrieve your conversion and loan history programmatically:
Endpoints:
Available Reports:
Q: Are conversions mandatory?
A: Conversions happen automatically when needed for trading or maintaining margin. You can also initiate manual conversions. To avoid automatic conversions, maintain sufficient balance in your primary trading currency.
Q: Can I choose which assets get converted?
A: The system automatically selects assets based on liquidity and efficiency. For manual conversions, you can specify the exact currencies and amounts.
Q: What if I don't want certain assets converted?
A: Assets are only auto-converted if they're on the whitelist for your wallet type. Contact support if you need to adjust conversion permissions for your account.
Q: Do I pay the spread on every conversion?
A: Yes, conversion spreads apply to protect against price movements. The spread is typically small (0.1% - 1%) and varies by currency pair and market conditions.
Q: How often is interest calculated?
A: Interest is calculated and charged every hour on uncovered losses exceeding the $30,000 threshold.
Q: Can interest rates change?
A: Yes, the hourly interest rate is a configurable parameter that can be adjusted by risk management. Changes apply to future calculations only, not retroactively.
Q: What happens if I can't pay the interest?
A: If you don't have sufficient collateral for conversion, the interest amount is added to your uncovered loss, increasing the amount that may incur future interest charges.
Q: Do I pay interest on weekends and holidays?
A: Yes, interest accrues hourly, 24/7/365, including weekends and holidays, on any uncovered loss above $30,000.
Q: How can I see my current uncovered loss and interest rate?
A: Your current USD balance, unrealized PnL, and uncovered loss amount are displayed in your futures trading dashboard and available via API queries.
Q: Is the $30,000 threshold per account or per currency?
A: The $30,000 interest-free threshold applies to your total uncovered loss (negative USD balance + unrealized losses) in your multi-collateral futures wallet.
Q: What if my uncovered loss fluctuates around $30K?
A: Interest is calculated each hour based on your uncovered loss at that moment. If your loss drops below $30K, no interest is charged for that hour. If it rises above, interest applies only to the excess amount.
Q: Can I see historical interest charges?
A: Yes, all interest payments are recorded in your account ledger with type INTEREST_PAYMENT and include the timestamp, amount, and your uncovered loss at that time.
Q: Do I need to manually manage this?
A: The system tracks everything automatically. However, monitoring your position and taking action when approaching the $30K threshold is recommended to avoid interest charges.
Q: How do I reduce my uncovered loss?
A: You can deposit USD or other collateral, close losing positions, or reduce position sizes. Positive trading performance also naturally reduces uncovered losses.
Q: Can I avoid interest by staying under $30K?
A: Yes! As long as your total uncovered loss (negative USD balance + unrealized losses) remains below $30,000, you will not be charged any interest.