Unified Wallet FAQ

The Unified Trading Wallet (also known as Unified Balance Manager or UBM) is a centralized balance tracking system that combines spot and futures trading into a single wallet. It allows you to:

Unified Wallet:

Traditional Separate Wallets:

The unified wallet feature is enabled at the account level. 

Instructions for enabling the unified wallet can be found here.

Switching between modes may require closing all positions and withdrawing funds from affected wallets.

Instructions for switching back to the non-unified wallet can be found here.

Haircuts are risk adjustments that reduce the collateral value of your assets to account for:

• Market volatility
• Liquidity risk
• Counterparty risk
• Operational risk

Formula: Collateral Value = Asset Balance × Market Price × (1 - Haircut Rate)

Tier 1 Assets (Low Risk):

• USD, EUR, GBP, major fiat: 0% haircut
• USDC: 1-2% haircut
• BTC, ETH: 2-3% haircut

Tier 2 Assets (Medium Risk):

• USDT: 2% haircut
• Large-cap cryptocurrencies: 10-15% haircut
• Established altcoins: 15-20% haircut

Tier 3 Assets (Higher Risk):

• Smaller altcoins: 25-50% haircut
• Newer tokens: 50-75% haircut
• High-volatility assets: Up to 90% haircut

No, single-collateral futures wallets have 0% haircuts. The collateral value equals the balance value. This is because there's no cross-currency conversion risk.

Haircuts are updated administratively as needed based on market conditions. Major changes are typically announced, but minor adjustments may occur without prior notice.

Initial Margin (IM):

• Minimum collateral required to open a new position
• Highest requirement
• Prevents overleverage

Maintenance Margin (MM):

• Minimum collateral required to keep a position open
• Typically 80% of spot margin requirements
• Warning threshold before liquidation

Liquidation Margin:

• Critical threshold where liquidation is triggered
• Typically 40% of spot margin requirements
• Account liquidated if breached

Liquidation is triggered when:

For Unified Wallets:

• Available liquidation margin ≤ 0
• Available maintenance margin ≤ 0 (with active liquidation event)

For Derivatives Wallets:

• Available Margin + Total Unrealized PnL < Maintenance Margin

Formula:
Available Liquidation Margin = Liquidation Equity + Derivatives PnL - (Spot Margin × 0.4) - Derivatives Liquidation Margin

Cross Margin:

• All positions share collateral
• Unrealized PnL from one position can support another
• More capital efficient
• Higher systemic risk
• If one position liquidates, all positions may be affected

Isolated Margin:

• Each position has dedicated collateral
• Positions don't affect each other
• Lower capital efficiency
• Limited risk exposure
• Only the specific position is liquidated if threshold breached

Margin Level = (Collateral Value + Unrealized PnL) / Margin Requirements × 100%

Interpretation:

• > 200%: Healthy account
• 100-200%: Approaching margin call
• < 100%: Liquidation risk

Step-by-Step:

1. Monitoring: System continuously checks margin levels
2. Warning: When available maintenance margin approaches zero
3. Liquidation Signal: Generated when liquidation margin exhausted
4. Execution Priority:
   
   1. Spot Non-ECP liquidation (highest priority
   2. Derivatives liquidation
   3. Unified spot liquidation
5. Position Closing: Positions closed at market price
6. Completion: Liquidation continues until margin restored

Yes! Several ways:

1. Add Collateral: Deposit USD or other assets
2. Close Positions: Reduce exposure before liquidation threshold
3. Reduce Position Size: Lower margin requirements
4. Monitor Margin Level: Set alerts for margin warnings

Auto-conversion automatically converts eligible collateral (BTC, ETH, etc.) to USD when your margin shortfall is detected.

Trigger: When USD Balance + Unrealized PnL < Trigger Threshold

Process:

1. System detects USD shortfall
2. Evaluates available collateral for conversion
3. Converts non-whitelisted assets to USD
4. Aims to bring balance to target threshold

Account-wide liquidation is the most severe type:

• All positions in the affected wallet are liquidated
• Continues until margin requirements restored
• Affects entire portfolio, not just one position
• Triggered when total available margin insufficient

When you need a currency you don't hold, the system can automatically convert available assets:

Conversion Process:

1. Balance check: Identifies available currencies
2. Rate lookup: Fetches exchange rates
3. Spread application: Applies conversion spread
4. Conversion execution: Debits source, credits target
5. Ledger recording: Records in transaction history

Two types:

Reference Rates (preferred):

• Institutional-grade index prices
• Updated every second

Mid Rates (fallback):

• Mid Rate = (Best Bid + Best Ask) / 2
• Real-time from order books

Conversion spreads protect against adverse price movements during conversions.

Typical Spreads:

• Major fiat pairs (USD/EUR): 0%
• Crypto/USD pairs: 0.25% - 0.50%
• Crypto/Crypto pairs: 0.50% - 1.00%

Calculation:

BaseToQuote: Converted Amount = Original × Rate × (1 - Spread%)

QuoteToBase: Converted Amount = Original × Rate / (1 + Spread%)

Automatic Conversion Triggers:

1. Insufficient collateral for margin requirements
2. Trade execution without required currency
3. Interest payments on uncovered losses

Yes, conversion spreads apply to all conversions. The spread is typically 0.0% - 0.25% depending on the currency pair and market conditions. This is separate from trading fees.

Best Practices:

1. Maintain USD balance to avoid frequent conversions
2. Convert larger amounts less frequently
3. Convert during favorable market conditions
4. Plan currency needs before trading
5. Use assets with tighter spreads when possible

Uncovered losses occur when you have:

• Negative USD balance from trading losses
• Unrealized losses on open positions
• Insufficient collateral to cover these negative amounts

Formula: Uncovered Loss = -(USD Balance + Unrealized PnL)

Yes! Kraken provides a $30,000 interest-free threshold:

✓ First $30,000 of uncovered loss: NO interest charged
✓ Only amounts above $30,000: Subject to hourly interest

Examples:

• $25,000 uncovered loss → $0 interest
• $45,000 uncovered loss → Interest on $15,000 only
• $100,000 uncovered loss → Interest on $70,000 only

Formula: Interest-Bearing Amount = max(0, Uncovered Loss - $30,000)

Hourly Interest = Interest-Bearing Amount × Hourly Interest Rate

Typical Rate: 0.01% per hour (~87.6% APR if sustained)

Note: The high rate encourages users to address uncovered losses quickly, not to maintain them long-term.

Interest is calculated and charged every hour on uncovered losses exceeding the $30,000 threshold.

If you don't have sufficient collateral for conversion to pay interest:

1. System attempts to convert available collateral to USD
2. If conversion insufficient, interest is added to your uncovered loss
3. This increases the base amount for future interest calculations
4. Creates a compounding effect if not addressed

Yes! Keep your total uncovered loss (negative USD balance + unrealized losses) below $30,000 and you'll pay zero interest.

Strategies:

1. Deposit USD
2. Close losing positions
3. Reduce position sizes

Yes, the hourly interest rate is a configurable parameter that can be adjusted by risk management. Changes apply to future calculations only, not retroactively.

The rate (approximately 87.6% APR) is intentionally high to:

• Encourage prompt action on uncovered losses
• Discourage using uncovered losses as long-term financing
• Incentivize proper risk management
• Protect the platform from excessive risk

The $30,000 interest-free threshold applies to your total uncovered loss in your account / wallet, not per currency or per position.

Reference rates are institutional-grade, time-weighted average prices from multiple high-quality sources:

• Major centralized exchanges
• Professional market makers
• Institutional trading venues
• Cross-verified price feeds

Updated: Every few seconds
Used for: Collateral valuation, margin calculations, conversions

Mid rates are calculated from Kraken's internal order books:
Mid Rate = (Best Bid + Best Ask) / 2
Updated: Real-time with each price change
Used for:  Fallback when reference rates unavailable

Staleness Protection:

• Prices older than thresholds trigger warnings
• Automatic fallback to alternative price sources
• Conservative valuations during feed interruptions
• Emergency use of last known good price

Main Wallet (Unified):

• Combines spot and futures balances
• Shared collateral across markets
• Cross-margining enabled
• Most capital efficient

Derivatives Multi-Collateral:

• Multiple currencies as collateral
• Futures trading only
• Haircuts applied
• USD-denominated margin

Derivatives Single-Collateral:

• One currency as collateral
• Futures trading only
• No haircuts (0%)
• Native currency margin

Derivatives Holding:

• Special holding wallet
• No trading
• Transfer wallet type

Transfers between wallets can be done via:

• Portfolio dashboard transfer interface
• API transfer endpoints

Note: Some transfers may trigger conversions or have restrictions.

The Main wallet (also called Spot wallet) is your primary spot trading wallet in a unified configuration. It can be used for spot trading and as collateral for futures positions when unified wallet is enabled.

Key Metrics to Watch:

• Current margin level percentage
• Available initial margin
• Available maintenance margin
• Available liquidation margin
• Unrealized PnL
• Collateral value

Recommended Levels:

• Healthy: > 300% margin level
• Acceptable: 200-300%
• Warning: 150-200%
• Danger: 100-150%
• Critical: < 100% (liquidation imminent)

Best Practices:

1. Maintain Buffer: Keep margin level well above 200%
2. Position Sizing: Don't overleverage
3. Monitor Closely: Check during volatile periods
4. Set Alerts: Configure margin warnings
5. Add Collateral: Deposit before liquidation
6. Diversify: Use multiple Tier 1 assets
7. Use Stop Losses: Limit potential losses
8. Stay Below $30K: Avoid interest charges

Immediate Actions:

1. Assess Situation: Check margin level and available collateral
2. Add Collateral: Deposit USD or approved assets
3. Close Positions: Reduce exposure
4. Reduce Size: Lower position sizes
5. Cancel Orders: Free up withheld collateral
6. Convert Assets: Manually convert to needed currency
7. Monitor: Watch margin level closely

Portfolio delta measures your portfolio's sensitivity to price changes:

Portfolio Delta = Σ (Position Size × Delta Per Unit)

Why It Matters:

• Helps understand directional exposure
• Useful for hedging strategies
• Important for risk assessment
• Affects margin requirements

Formula: Max Position Size = Available Initial Margin / (Position Value × Initial Margin Rate)

Account for:

• Current collateral value (with haircuts)
• Existing positions and margin used
• Potential market movements
• Desired safety buffer

VaR estimates the maximum loss over a specific time period at a given confidence level:

VaR = Portfolio Value × Volatility × Confidence Factor × √Time Period

Simplified Understanding:

• 95% VaR of $10,000 = 95% confident you won't lose more than $10K
• Higher VaR = higher risk
• Used for risk assessment and position sizing

Step-by-Step:

1. Get Asset Balance: Current holdings of each asset
2. Get Market Price: Reference rate or mid rate
3. Apply Haircut: Multiply by (1 - haircut rate)
4. Convert to USD: If not already in USD
5. Sum Total: Add all asset collateral values

Formula: Collateral Value = Σ(Asset Balance × Market Price × (1 - Haircut Rate))

Without Open Orders: Available Margin = Equity + Derivatives Unrealized PnL - Initial Margin Requirements

With Open Orders: Available Margin = Equity + Derivatives PnL - Spot Margin - Withheld - Initial Margin - Derivatives Margin (with orders)

Balance Value:

• Nominal value of all assets
• No risk adjustments
• Balance Value = Σ(Asset Balance × Market Price)

Collateral Value:

• After applying haircuts
• Used for margin calculations
• Collateral Value = Σ(Asset Balance × Price × (1 - Haircut))

Equity:

• Collateral value plus unrealized PnL
• Your actual account value
• Equity = Collateral Value + Unrealized PnL

Maintenance Margin Rate = 0.8 (80% of spot margin requirements)

Available Maintenance Margin = liqEquity + DerivativesUnrealizedAsMargin - (margin × 0.8)  - DerivativesMaintenanceMarginRequirements

Liquidation Margin Rate = 0.4 (40% of spot margin requirements)

Available Liquidation Margin = liqEquity + DerivativesUnrealizedAsMargin - (margin × 0.4) - DerivativesLiquidationMarginRequirements

Precision Settings:

• High precision for internal calculations
• Asset-specific decimals (BTC: 8, USD: 2)
• Percentage scale: -4 (for 0.01% precision)
• Rounding: Half-even (banker's rounding)

For Long Positions:

Liquidation Price = Entry Price × (1 - (Collateral / Position Value - MM Rate))

For Short Positions:

Liquidation Price = Entry Price × (1 + (Collateral / Position Value - MM Rate))

Example:

• Long 2 BTC at $50,000
• Collateral: $20,000
• MM Rate: 5%
• Liq Price ≈ $50,000 × (1 - ($20,000/$100,000 - 0.05)) = $42,500

KFEE (Kraken Fee Token) has special conversion rules:

• Fixed rate: 100 KFEE = 1 USD
• Used for fee payments only
• Excluded from standard collateral calculations
• Provides fee discounts when used

Fee Payment Order:

1. KFEE tokens (with discount)
2. Native pair currency (e.g., BTC for BTC/USD)
3. USD equivalent
4. Other available assets (with conversion and spreads)

Common Causes:

1. Haircuts Applied: Check haircut rates for your assets
2. Price Source: Reference rates may differ from displayed prices
3. Stale Prices: Price feeds may be delayed
4. Asset Not Eligible: Some assets may not be approved as collateral

Check:

• Your asset holdings and haircut rates
• Current reference rates vs displayed prices
• Account dashboard for detailed breakdown

Common Reasons:

1. Rapid Price Movement: Sudden market volatility
2. Unrealized Losses: Open positions moved against you
3. Haircut Changes: Increased haircuts during volatility
4. Auto-Conversion Failed: Insufficient convertible collateral
5. Didn't Monitor: Margin level dropped without notice
6. Pending Deposits: Collateral not yet credited

Prevention:

• Set margin alerts
• Monitor during volatile periods
• Maintain larger safety buffers
• Use stop losses
• Keep liquid collateral available

Conversion spreads protect against:

• Price slippage during conversion
• Market impact of large conversions
• Adverse selection
• Operational costs

This is standard practice for automatic conversions and protects both you and the platform from rapid price movements.

Possible Reasons:

1. Above $30K Threshold: Your uncovered loss exceeded $30,000
2. Multiple Hours: Interest charged hourly, accumulates over time
3. High Rate: 0.01%/hour (~87.6% APR) is intentionally high
4. Compounding: Unpaid interest added to uncovered loss
5. Large Uncovered Loss: The larger the loss above $30K, the more interest

Solutions:

• Reduce uncovered loss below $30K
• Add collateral promptly
• Close losing positions
• Monitor hourly to address quickly

Common Causes:

1. Insufficient Available Margin: Need more initial margin
2. Position Limit Reached: Maximum positions exceeded
3. Available Balance Low: Not enough free collateral
4. Regional Restrictions: Asset or trading type restricted
5. Account Status: Account may have restrictions
6. Open Orders: Too much collateral withheld

Check:

• Available initial margin
• Cancel unnecessary orders
• Add collateral
• Review position limits
• Check account status

Access your transaction history via:

• Account dashboard → Ledger/History
• API endpoints (GetLedgers, GetTrades)
• Export functions for CSV/PDF

Ledger Entry Types:

• LT_Trade: Trading activity
• LT_Conversion: Currency conversions
• LT_Interest: Interest payments (if any)
• LT_Deposit/Withdrawal: Funding
• Various derivative types

Via Dashboard:

• Account overview → Margin section
• Position details → Individual requirements
• Collateral breakdown → Applied haircuts

Via API:

• GetTradeBalance endpoint
• GetOpenPositions endpoint
• Account query endpoints

Reasons:

1. Time-Weighted: Reference rates are averages over time
2. Multiple Sources: Aggregated from many exchanges
3. Manipulation Resistant: Designed to resist short-term manipulation
4. Update Frequency: Updated every few seconds, not real-time
5. Different Purpose: Designed for collateral valuation, not trading

Note: This is normal and intentional. Reference rates provide stable, fair pricing for margin calculations.