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Encyclopedia DeFi · Entry 340

Leverage, margin and notional: the exposure behind a deposit

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DeFi
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3 cited records
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Key facts

Key facts for Leverage, margin and notional: the exposure behind a deposit
FactDetailSource
Initial marginOpening exposure requires the applicable initial margin.[1]
MaintenanceContinuing exposure requires sufficient account equity.[2]
ValuationThe cited liquidation model uses oracle-valued positions.[2]
01

Compute exposure before percentages

A hypothetical linear long of 100 units entered at 100 has 10,000 notional. If supported by 2,000 equity, initial effective leverage is 5×. A fall to 95 produces a gross loss of 100 × 5 = 500, or 25% of starting equity.

Remaining equity is 1,500 and current notional is 9,500, so effective leverage becomes about 6.33×. The example excludes funding, fees and other positions.

02

Maximum leverage is not a safe-loss budget

A venue’s opening requirement sets an admission constraint. Maintenance rules, price moves and changes in other positions affect whether the account can continue. The liquidation boundary is not generally the point where a simple entry-price loss consumes every deposited unit.

03

Check the multiplier and collateral currency

Linear quote-currency examples are convenient teaching tools. An inverse contract or crypto-denominated collateral can respond differently. Use the product’s multiplier, valuation and settlement rules before applying a dollar-per-price-point calculation.

Direct answers

Questions people ask

Does adding margin increase the number of contracts I already hold?

No. It changes the equity supporting existing exposure; increasing contract size is a separate trade.

Inspect the evidence

The answer and key facts have stable claim links. These records retain the scope and qualification when reused.

Notional measures the size of contract exposure; margin is the collateral or equity supporting it. A simple leverage ratio is notional divided by supporting equity. A small underlying price move can therefore create a much larger percentage change in equity, and maintenance requirements can force liquidation before equity reaches zero.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.

Link to this claim
Initial margin: Opening exposure requires the applicable initial margin.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.

Link to this claim
Maintenance: Continuing exposure requires sufficient account equity.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.

Link to this claim
Valuation: The cited liquidation model uses oracle-valued positions.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.

Link to this claim
Revision history
  1. — First publication after primary-source research and separate automated verification.

Source register

Sources and references

Retrieval dates and locators are recorded individually.
  1. Markets and margin parametersdYdX Foundation

    Initial/maintenance margin definitions and cross versus isolated market scope.

    Locator: Liquidity tiers; Market types · Version / scope: Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded · Retrieved: 2026-10-02T18:53:21.108ZOpen source
  2. Liquidations on dYdX ChaindYdX Operations Services

    Distinguishes eligibility, order execution and account losses.

    Locator: Margin; fillable price; liquidation · Version / scope: Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded · Retrieved: 2026-10-02T18:53:20.755ZOpen source
  3. Inverse OptionsDeribit

    Official support article retrieved through its public Help Center API; inverse settlement specifications.

    Locator: Settlement process change; Settlement examples · Version / scope: Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded · Retrieved: 2026-10-02T18:53:21.588ZOpen source
How this article was made

Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.

Editorial method and corrections

Degrees of Satoshi editorial project. “Leverage, margin and notional: the exposure behind a deposit.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/leverage-margin-notional/