# Maintenance Margin Requirements ⎊ Area ⎊ Resource 2

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## What is the Requirement of Maintenance Margin Requirements?

Maintenance margin requirements define the minimum level of collateral necessary to keep a leveraged position open after it has been established. Unlike initial margin, which is required to open the position, maintenance margin ensures that the position remains solvent as market prices fluctuate. If the collateral value falls below this threshold, the trader receives a margin call, requiring additional funds to be deposited. Failure to meet this requirement triggers liquidation.

## What is the Liquidation of Maintenance Margin Requirements?

The maintenance margin requirement acts as the trigger for automated liquidation processes. When a position's collateral value drops below the maintenance level, the system automatically sells the collateral to close the position and prevent further losses. This mechanism protects the exchange or lending protocol from incurring bad debt. The speed and efficiency of this liquidation process are critical for maintaining systemic stability, especially during periods of high volatility.

## What is the Threshold of Maintenance Margin Requirements?

The maintenance margin threshold is carefully calibrated to balance risk management with capital efficiency. A lower threshold allows traders to maintain positions with less collateral, increasing leverage but also raising the risk of rapid liquidation during sudden market downturns. Conversely, a higher threshold reduces leverage but provides a larger buffer against volatility. The specific threshold often varies based on the asset's volatility and the exchange's risk policy.


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## [Cross-Chain Margin Verification](https://term.greeks.live/term/cross-chain-margin-verification/)

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**Original URL:** https://term.greeks.live/area/maintenance-margin-requirements/resource/2/