A New Breakthrough in On-Chain Margin System: Portfolio Margin and HIP-3 Protocol

Traditional on-chain margin trading has a clear design flaw—spot and perpetual contracts are completely isolated. What are the consequences of this? Even if your positions are perfectly hedged, the system still requires over-collateralization.

Imagine this: you buy Bitcoin on the spot market and simultaneously short the same amount in perpetual contracts. Theoretically, your risk is fully hedged, but the old system still demands you lock in excess margin. This is unreasonable.

The Portfolio Margin recently introduced on the Hyperliquid testnet is changing all of this. The new mechanism elevates risk assessment granularity from a single market to the entire portfolio level. The system can now identify true hedging relationships and only require margin on the net exposure. The result? Capital efficiency is greatly improved, making professional trading strategies truly feasible.