PnL Realization and Settlement

DerivaDEX tracks unrealized PnL on open positions continuously, then realizes that PnL into USDC collateral at defined points.

How PnL is realized

PnL becomes realized in two different ways.

Path	When it happens	What changes
Trade-fill realization	When a fill closes or reduces exposure	The fill realizes trade PnL immediately into strategy collateral
Periodic PnL settlement	At the periodic settlement boundary	The remaining unrealized PnL on each open position is realized into strategy collateral

Periodic PnL settlement is separate from funding. A settlement cycle can contain both actions, but they are not the same calculation.

Periodic settlement calculation

At periodic settlement, DerivaDEX marks each open position to the current mark price (the fair-risk price used for margin and liquidation), realizes that unrealized PnL into USDC collateral, and resets the position’s average entry price to the settlement mark.

settlement_pnl = unrealized_pnl(mark_price)
new_collateral = old_collateral + settlement_pnl
new_avg_entry_price = mark_price
position_size and side stay the same

Effect	Result
Unrealized gain	Credited to strategy collateral in USDC
Unrealized loss	Debited from strategy collateral in USDC
Average entry price	Reset to the settlement mark price
Position size	Unchanged
Position side	Unchanged

If the unrealized PnL on a position is zero at the settlement mark, the periodic settlement step does not change collateral for that position.

Timing

Periodic PnL settlement runs on its own cadence inside the broader settlement-epoch schedule.

Parameter	Value	Notes
PnL settlement cadence	Every `24` hours	The public baseline realizes open-position PnL once every three 8-hour settlement epochs
Price input	Mark price	The same fair-risk price used for margin and liquidation
Balance updated	Strategy collateral	The result is a `STRATEGY_UPDATE` with reason `PnlSettlement`
Markets covered	Perpetual swaps	The public product set does not currently include expiry contracts

Relationship to other balance changes

PnL settlement is one of several ways a strategy balance can change.

Balance change	Event reason	Notes
Deposit or withdrawal	`Deposit`, `Withdraw`, `WithdrawIntent`	On-chain collateral movements
Trade fill	`Trade`	Fill-time realized PnL and non-DDX fees
Periodic PnL settlement	`PnlSettlement`	Realizes remaining unrealized PnL on open positions
Funding	`FundingPayment`	Periodic transfer between longs and shorts
Fees in collateral currency	`Fee`	Charged in USDC when fees are not paid in DDX

When a settlement cycle contains both periodic PnL settlement and funding, PnL settlement happens first and funding follows.

Worked settlement cases

These examples show the periodic settlement step for one open position.

Position before settlement	Settlement mark	Periodic settlement result
Long `1` ETHP with average entry `2,000`	`2,050`	`+50` USDC realized to collateral; average entry resets to `2,050`
Long `1` ETHP with average entry `2,000`	`1,950`	`-50` USDC realized to collateral; average entry resets to `1,950`
Short `2` ETHP with average entry `2,000`	`1,980`	`+40` USDC realized to collateral; average entry resets to `1,980`

​How PnL is realized

​Periodic settlement calculation

​Timing

​Relationship to other balance changes

​Worked settlement cases

​Related references

How PnL is realized

Periodic settlement calculation

Timing

Relationship to other balance changes

Worked settlement cases

Related references