On October 10, 2025, crypto had its largest liquidation day on record: about $19 billion of leveraged positions were closed in 24 hours, and about 1.6 million accounts were liquidated, according to CoinGlass data. When prices fall that fast in a cross-margin account, a loss does not stay where it started, because every position draws on the same balance. That day, open Nolus positions shrank by about 23% in total, against 40 to 55% on perp venues, and Nolus took on no bad debt (how the crash hit lending, perps and Nolus).
Ships handle the same problem with bulkheads: walls that split the hull into watertight compartments, so a leak floods one compartment instead of the whole ship. Cross margin is a hull without bulkheads. Isolated margin puts them in. Nolus adds a pump: every position is isolated, and when one takes on water, a partial liquidation sells part of that position to bring it back to health instead of letting it sink.
This article follows one leak through each hull, using the rules of Hyperliquid, the venue behind the perps in the Phantom wallet, as they stood on October 20, 2026.
What Is Cross Margin? One Hull, No Bulkheads
Cross margin is a setting where all your open positions draw on one shared balance, so a loss on one is covered by the money behind the others.
Margin is the money you put behind a leveraged position. At 5x, $1,000 of margin holds a position worth $5,000. If the price falls so far that the margin can no longer cover the loss, the position is liquidated: it is sold off before it can lose more than the money behind it. Under cross margin there is one deposit, and it backs everything, and a profit on one position counts as margin for the next one you open. Cross margin is Hyperliquid's default, which, in its docs' words, allows for "maximal capital efficiency".
The catch is the open hull. The room a losing position gets is your other positions' money, so its liquidation price moves whenever they move. When the shared balance runs out, Hyperliquid sends orders to close every position in full. If the balance keeps falling before that works, its backstop, a vault that takes over accounts the market could not close, receives all the cross positions and the margin behind them, and an account with no isolated positions is left with "zero account equity".
You may also come across "cross margining". In traditional finance that means something else: a clearing house, the middleman that settles futures and options trades, works out one margin requirement for an investor's accounts in two related markets instead of one for each. In crypto, cross margin simply means one shared balance.
What Is Isolated Margin? Watertight Compartments
Isolated margin puts a set amount of money behind each position, and only that money is at risk. Hyperliquid's docs put it plainly: "Liquidations in that asset do not affect other isolated positions or cross positions." A leak stays in its compartment. The price is less room, because a position can only lean on its own margin.
On Hyperliquid, an isolated position that reaches its line usually closes in full: it sends a market order for the whole position, and splits it into 20% pieces only when the position is worth more than $100,000. The compartment is sealed, but whatever was in it goes.
Two Positions, One Leak
Say you have $2,000. You put $1,000 behind a 5x SOL position and $1,000 behind a 5x ETH position, so each one holds $5,000. To keep the arithmetic simple, both start at $100. Then SOL falls 40% and ETH does not move.
In a cross-margin account, both positions lean on the full $2,000, so SOL can fall about 36% before the account reaches Hyperliquid's line. Then Hyperliquid sends orders to close both, ETH included, even though ETH never moved. About $180 is left at best. If the backstop takes over, nothing is.
On Nolus the two positions sit in separate compartments. As SOL falls, the pump runs: the SOL position is trimmed a slice at a time, five times on the way down. After the 40% fall it holds about 3.5 SOL against $188 of debt, worth about $23 after its debt. The ETH position is untouched and still worth $1,000 after its debt. If SOL then climbs back to $100, the SOL position is worth about $164 after its debt, and both positions are still open.
Here is how the same 40% fall ends in each hull:
| Nolus | Cross margin on Hyperliquid | |
|---|---|---|
| What is left of your $2,000 after SOL falls 40%? | About $1,023 | About $180 at best |
| Does the SOL loss close your ETH? | No | Yes |
| What if SOL comes back to $100? | Both still open, about $1,164 | No position left, about $180 at best |
| How much is sold at the line? | A slice | Both positions, in full |
| Is there a penalty? | $0 on a partial liquidation | None, unless the backstop takes over |
Hyperliquid's isolated mode puts a bulkhead between the two positions as well. There, the SOL position closes in full at about an 18% drop with about $103 of its margin left at best, and the ETH position is untouched: about $1,103 after the fall, more than Nolus's $1,023. What Nolus is built for is keeping the position through the dip. The isolated position has already closed, so if SOL comes back to $100 that account is still at about $1,103, while Nolus holds about $1,164 with both positions open.
What Cross Margin Does Well
An open hull has real advantages. Nothing sits idle: money one position does not need stands behind the others, and gains on a winning position count as margin straight away. A losing position can lean on everything in the account, so it takes a bigger fall before anything happens. If you watch your positions closely and add money when the market turns, that room can carry you through a dip.
The Pump: How Nolus Handles a Breach
Every Nolus position is isolated. Each one has its own collateral and its own liquidation line, and a liquidation on one position never affects another. The line is set when you open the position and is never rewritten, so the rules a position opens under are the rules it lives under.
There are no margin calls: nothing asks you to add money. If you want to act early, you can pay down part of the debt with any supported asset, any amount, at any time, which moves the line further away. Or you can open at lower leverage: at 2.5x, SOL can fall 33% before Nolus sells anything, as what a leveraged SOL trade really costs shows across four lending apps.
If the water does reach the line, the pump trims the position instead of letting it sink:
- Three on-chain warnings come first, as the position gets closer to its line.
- The protocol sells only what brings the position back to health: a slice, not the whole position.
- The penalty is $0 on a partial liquidation.
- It liquidates on the trend, not the wick (a brief spike down on the price chart), and never sells into a quote the oracle doesn't agree with. The oracle is the price feed each liquidation sale is checked against; Market Anomaly Guard explains how.
- The position holds the real SOL, so what is left rises again if SOL does.
Holding a Nolus position costs interest on the part you borrow, at a rate fixed at open, with no funding fees. How funding rates work compares that with the hourly fees on perps.
Cross vs Isolated Margin at a Glance
Set side by side, the three hulls differ most in what happens after a leak:
| Nolus | Hyperliquid cross | Hyperliquid isolated | |
|---|---|---|---|
| Can one loss close another position? | No | Yes, once the balance runs out | No |
| What is sold at the line? | A slice | Every position in full, if under $100,000 | The whole position, if under $100,000 |
| Is there a penalty? | $0 on a partial liquidation | None, unless the backstop takes over | None, unless the backstop takes over |
| If a liquidation hits and the price comes back, what do you still hold? | Part of the position | No position left | That position is gone |
| What do you pay to hold it? | A rate fixed at open, no funding fees | Funding, every hour | Funding, every hour |
| What does the position hold? | The real asset | A contract on the price | A contract on the price |
A cross account gives each position the most room, and an isolated perp keeps a loss to one position. Nolus keeps the loss to one position and then trims it instead of closing it.
What Nolus Gives Up, and When Each Fits
Cross margin fits users who watch the screen, hold for hours and want every dollar in the account working.
Nolus fits users who hold for weeks or months and want each position's liquidation line set on the day they open, with no way for one bad position to reach the rest.
The one real cost is that the pump starts sooner. In the example, Nolus sells its first slice of SOL at an 11% drop, while the cross account is untouched until about 36%. At lower leverage the gap is wider: run the same example at 2.5x, so each position is worth $2,500 on $1,000 of margin, and a cross account rides out the 40% fall with both positions open, because SOL would have to fall about 77% to reach Hyperliquid's line. Hyperliquid's isolated mode would have closed the SOL position in full at about a 38% drop, leaving that account at about $1,038 either way. On Nolus the SOL position is trimmed twice, at drops of 33% and about 39%, and the account holds about $1,078 after the fall. If SOL then climbs back to $100, the cross account is back to its $2,000 and the Nolus account holds about $1,424.
On Nolus, every position is isolated and a liquidation on one never affects another. There are no margin calls. A liquidation trims a slice instead of closing the position, with a $0 penalty on a partial liquidation, and it liquidates on the trend, not the wick. The position holds the real asset, and the rate is fixed at open with no funding fees. What Nolus gives up is that the pump starts sooner: with no shared balance to lean on, a losing position is trimmed earlier.
Sources
- October 10, 2025: CoinGlass data as reported by MoneySense, "Crypto investors lose billions in biggest-ever liquidation event" and Decrypt, "$19B Wiped Out in Crypto's Biggest Liquidation Ever", citing CoinDesk; Nolus that day: how the crash hit lending, perps and Nolus
- Hyperliquid: Margining, Liquidations and the info API (
meta: highest leverage 20x on SOL and 25x on ETH, so a line at 2.5% and 2% of each position), read October 20, 2026 - Phantom: Phantom Perps
- Nolus: Liquidations & risk and Overview
- Nolus position settings read from the chain on October 20, 2026: a 5x position opens with 80% of its value borrowed, is liquidated at 90%, and each partial liquidation brings it back to 83%. The example is hypothetical. It leaves out interest, funding, swap costs and fees, and treats each price as the one each system acts on: Hyperliquid's mark price, and on Nolus the trend price that triggers a liquidation.
Frequently asked questions
What is cross margin?
It is a setting where all your open positions share one balance. A loss on one position is covered by the money behind the others, which gives it more room, but if the balance runs out every position can be closed at once.
What is the difference between cross margin and isolated margin?
Under cross margin every position draws on one shared balance. Under isolated margin each position has its own money behind it, and a liquidation on one does not touch the others. Cross margin gives a losing position more room; isolated margin keeps the damage to that one position.
Is cross margin riskier than isolated margin?
It depends on what you are protecting. Cross margin makes any single position harder to liquidate, but when a liquidation does come it can take every position in the account with it. Isolated margin can liquidate a position sooner, but only that position.
When is cross margin better?
When you watch your positions closely, hold them for hours rather than weeks, and want every dollar in the account working. The shared balance gives a losing position room, as long as you are there to add money or close it when the market turns.
What is cross margining?
In traditional finance, it is an arrangement where a clearing house sets one margin requirement across an investor's accounts in two related markets, such as futures and options, instead of one for each. In crypto, people usually mean cross margin: one shared balance behind all your positions.
Does Nolus use cross or isolated margin?
Isolated. Every Nolus position has its own collateral and its own liquidation, and a liquidation on one position never affects another. There are no margin calls, and a liquidation first sells only part of the position instead of closing it.
