Academy Beginners Tutorial Article

IX. USDT Sustainable Contracts: Tiered Maintenance Margin Ratio System


1. What is Maintenance Margin Ratio?

Maintenance Margin Ratio is the lowest required Margin Ratio for a user to maintain the current open position(s). When the Margin Ratio of the account is lower than the Maintenance Margin Ratio + Liquidation Fee Rate, full or partial liquidation will occur.

Fixed Margin Mode: Margin Ratio = (Fixed Margin + UPL) / Position Value

Cross Margin Mode: Margin Ratio = (Balance + RPL + UPL) / Position Value

Position Value = Face Value x Number of contracts x Latest Mark Price

2. Importance of Maintenance Margin Ratio

This tiered Maintenance Margin Ratio system is adopted to avoid the liquidation of large positions, causing big impact on market liquidity. Basically, the larger the positions held, the higher Maintenance Margin Ratio will be required, and the lower the Leverage will be available.

3. Maintenance Margin Ratio Tiers

Under Fixed Margin Mode, the number of contracts, tier, and the Maintenance Margin Ratio are calculated based on the specific position.

Under Cross Margin Mode, the number of contracts, tier, and the Maintenance Margin Ratio are calculated based on all the positions. If a user opened both long and short positions in the same contract, our system will count the total number of contracts they hold and place them in the respective tier. For example, if a user opened 10,000 long BTC contracts and 15,000 short BTC contracts, then he/she will be placed in the tier of 25,000 contracts, which is tier 1.

ContractThe maximum number of contract Tier 1 can open(cont)Increasement(cont)The maintenance margin ratio of Tier 1The minimum initial margin ratio of Tier 1