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# Navigating CEX Data: Assets & Positions
- URL: https://blog.1token.tech/crypto-middle-office-navigating-cex-data-assets-positions/
- Published: 2025-01-22T09:11:27.000Z
- Updated: 2026-07-22T10:52:25.000Z
- Description: 1Token Middle-Office Insight Series: Crypto Trading Data & Operations Essentials I
- Author: 1Token
- Tags: Research article

In crypto markets, accurate financial metrics are critical. From margin reconciliation to real-time PnL calculations, a consistent framework helps prevent errors. Understanding asset structures, particularly margin and derivatives positions, is essential for **reconciliation processes and accurate calculation of profits and losses (P&L)**. 

As a **Crypto Fund Portfolio Management Software provider**, 1Token brings in-depth knowledge of crypto trading and fund administration. This article explores two key concept, **Cash Balance and Equity**, and explains how **Unrealized PnL (UPnL)** is settled. By outlining key differences, challenges, and best practices, we aim to help crypto funds' middle-office teams, fund auditors, and fund admins enhance oversight and streamline reconciliations. 

![](https://storage.ghost.io/c/e5/29/e529ae0e-b8de-4215-bee5-f2e194311421/content/images/2025/01/Asset---Position-View-in-1Token-CAM.png)

Asset & Position View in 1Token CAM

## Cash Balance and Equity 

![](https://storage.ghost.io/c/e5/29/e529ae0e-b8de-4215-bee5-f2e194311421/content/images/2025/01/Comparison-of-Cash-Balance-and-Equity-in-Exchange.png)

Comparison of Cash Balance and Equity in Exchange

**Cash Balance** and **Equity** are pivotal metrics in portfolio management and trading strategies. A clear understanding of their distinctions is integral to developing PMS, middle-office systems, and accounting solutions. 

### Definitions 

- **Cash Balance:** Represents the actual assets held in an account, including deposited amounts, spot market transactions, and Realized PnL. Unrealized PnL is excluded.
- **Equity:** Denotes the total value of an account, comprising Cash Balance and Unrealized PnL for contracts denominated in the current settlement currency. Formula:  
Equity = Cash Balance + Unrealized PnL

In contrast to traditional finance, crypto markets allow tokens to be traded against one another, effectively making every token a "cash equivalent" with its respective Cash Balance and Equity. 

### Key Distinctions 

- **Cash Balance:** A static measure, updated only when deposits, withdrawals, fees, or Realized PnL occur.
- **Equity:** A dynamic value, reflecting real-time market movements in an account’s overall worth.

The variance between these metrics stems from the Unrealized PnL of open positions. 

In the operation of a crypto fund, front-office and middle-office teams focus on different priorities: 

- For **fund front office** (traders, portfolio managers..), Equity is a real-time indicator of position value.
- For **fund middle office** (operations, fund accountants..), Cash Balance is critical for reconciliation. The reconciliation process follows this formula:  
Opening Cash Balance + Transaction Records = Closing Cash Balance  
Accurate reconciliation ensures complete transaction records, enabling downstream analysis and compliance reporting.

![](https://storage.ghost.io/c/e5/29/e529ae0e-b8de-4215-bee5-f2e194311421/content/images/2025/01/Reconciliation-Report-in-1Token-CAM.png)

Reconciliation Report in 1Token CAM

## Settlement Model for Unrealized PnL 

The settlement of Unrealized Profit and Loss (UPnL) represents a critical process in derivatives trading. Different exchanges adopt diverse settlement methodologies. For instance, Deribit employs a periodic settlement approach, while Binance opts to settle only upon position closure. 

![](https://storage.ghost.io/c/e5/29/e529ae0e-b8de-4215-bee5-f2e194311421/content/images/2025/01/Unrealized-PnL-in-Binance.png)

Unrealized PnL in Binance

  
![](https://storage.ghost.io/c/e5/29/e529ae0e-b8de-4215-bee5-f2e194311421/content/images/2025/01/Periodic-Settled-in-Deribit.png)

Periodic Settled in Deribit

  
### Why is UPnL Subject to Periodic Settlement? 

The periodic settlement mechanism (e.g., daily or hourly settlement) is typically designed to mitigate risks and streamline system management: 

- **Risk Mitigation:** Periodically settling UPnL as Realized PnL helps reduce systemic risks arising from extreme market volatility.
- **Liquidity Management:** Post-settlement, UPnL directly impacts the Cash Balance, enabling users to withdraw funds or adjust positions more efficiently.
- **Margin Protection:** In margin trading, periodic settlement contributes to ensuring the accuracy of account Equity, preventing liquidation risks due to inaccurate floating P&L calculations.

Traditional futures exchanges, such as the CME (Chicago Mercantile Exchange), typically employ a daily settlement mechanism (Mark-to-Market). 

### Why Doesn't Binance Implement Periodic Settlement? 

Binance and other crypto trading platforms adopt a "real-time settlement" model, where UPnL is continuously calculated dynamically instead of being periodically converted to Realized PnL. The rationale behind this design includes: 

- **User Experience:** Real-time settlement avoids account fluctuations caused by fixed settlement periods, allowing users to view accurate account Equity at any given time.
- **Technical Agility:** Crypto markets exhibit high volatility and trading volumes. Real-time UPnL calculation can alleviate the system's batch settlement load.
- **Minimized Trading Disruptions:** Periodic settlement may incur additional trading fees or slippage, while Binance's real-time settlement enables users to adjust positions more freely.

Different settlement models also present varying requirements for reconciliation and P&L analysis. Based on the characteristics of the crypto, 1Token calculates real-time UPnL for periodically settled exchanges (e.g., Deribit, Bybit) in addition to utilizing the exchanges' raw data, enhancing data comparability across different counterparties. 

**Written by Yuan Bo | Edited by KT** 

For media inquiries or details about 1Token's product capabilities, please contact: [service@1token.trade](mailto:service@1token.trade) 

Learn how 1Token's Middle Office System supports financial institutions (crypto funds, auditors, and fund admins) in crypto data collection and trade reconciliation: [https://1token.tech/products/crypto-trade-reconciliation](https://1token.tech/products/data-collection-reconciliation?ref=blog.1token.tech)