# Margin Maintenance ⎊ Area ⎊ Resource 2

---

## What is the Requirement of Margin Maintenance?

Margin maintenance refers to the minimum amount of collateral required to keep a leveraged position open in derivatives trading. This requirement ensures that a trader has sufficient funds to cover potential losses from adverse price movements. Failure to meet the maintenance margin level triggers a margin call, requiring the trader to add more collateral or face liquidation.

## What is the Risk of Margin Maintenance?

The primary purpose of margin maintenance is to manage counterparty risk for the exchange or lending protocol. By enforcing a minimum collateral threshold, the system protects itself from losses that would occur if a position's value drops below zero. In cryptocurrency markets, high volatility necessitates robust margin requirements to prevent systemic risk.

## What is the Liquidation of Margin Maintenance?

When a position's collateral falls below the maintenance margin, the liquidation mechanism automatically closes the position to prevent further losses. This process typically involves selling the collateral or the underlying asset to cover the outstanding debt. The efficiency and fairness of this mechanism are critical for maintaining the solvency of derivatives platforms.


---

## [Real Time Risk Clearing](https://term.greeks.live/term/real-time-risk-clearing/)

## [Margin Call Cascades](https://term.greeks.live/term/margin-call-cascades/)

## [Synthetic Asset Creation](https://term.greeks.live/term/synthetic-asset-creation/)

## [Trading Capital Preservation](https://term.greeks.live/term/trading-capital-preservation/)

## [Audit Trail Analysis](https://term.greeks.live/term/audit-trail-analysis/)

## [Real Time Market Attestation](https://term.greeks.live/term/real-time-market-attestation/)

## [Protocol Physics Principles](https://term.greeks.live/term/protocol-physics-principles/)

## [Systemic Solvency Thresholds](https://term.greeks.live/term/systemic-solvency-thresholds/)

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