Collateral Top Up

Collateral top up is the act of adding more assets to a margin account to restore the collateral ratio after a decline in value. This can be done manually by the trader or automated by smart contracts if the user has provided a source of funds.

By topping up, the user avoids the liquidation penalty and keeps their position active despite unfavorable market moves. It is a vital risk management tool for traders who wish to maintain long-term positions through periods of high volatility.

Efficient top up mechanisms are essential for a smooth user experience in decentralized derivatives platforms.