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  "id": "leverage-margin-notional",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/leverage-margin-notional/",
  "collection": "defi",
  "title": "Leverage, margin and notional: the exposure behind a deposit",
  "description": "Separate position exposure from the collateral supporting it and calculate how price changes affect equity.",
  "aliases": [
    "leverage notional margin example",
    "notional divided by margin explained"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T19:18:00.092Z",
    "dataAsOf": "2026-10-02"
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "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.",
    "claimId": "leverage-margin-notional-quick-answer",
    "sourceIds": [
      "x425-defi-dydx-markets",
      "x425-defi-dydx-liquidation"
    ]
  },
  "keyFacts": [
    {
      "label": "Initial margin",
      "value": "Opening exposure requires the applicable initial margin.",
      "sourceIds": [
        "x425-defi-dydx-markets"
      ],
      "id": "initial-margin",
      "claimId": "leverage-margin-notional-fact-initial-margin"
    },
    {
      "label": "Maintenance",
      "value": "Continuing exposure requires sufficient account equity.",
      "sourceIds": [
        "x425-defi-dydx-liquidation"
      ],
      "id": "maintenance",
      "claimId": "leverage-margin-notional-fact-maintenance"
    },
    {
      "label": "Valuation",
      "value": "The cited liquidation model uses oracle-valued positions.",
      "sourceIds": [
        "x425-defi-dydx-liquidation"
      ],
      "id": "valuation",
      "claimId": "leverage-margin-notional-fact-valuation"
    }
  ],
  "prerequisites": [
    "perpetual-futures"
  ],
  "sections": [
    {
      "id": "example",
      "heading": "Compute exposure before percentages",
      "sourceIds": [
        "x425-defi-dydx-liquidation"
      ],
      "paragraphs": [
        "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."
      ]
    },
    {
      "id": "requirements",
      "heading": "Maximum leverage is not a safe-loss budget",
      "sourceIds": [
        "x425-defi-dydx-markets",
        "x425-defi-dydx-liquidation"
      ],
      "paragraphs": [
        "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."
      ]
    },
    {
      "id": "contracts",
      "heading": "Check the multiplier and collateral currency",
      "sourceIds": [
        "x425-defi-dydx-liquidation",
        "x425-defi-deribit-inverse"
      ],
      "paragraphs": [
        "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."
      ]
    }
  ],
  "faq": [
    {
      "question": "Does adding margin increase the number of contracts I already hold?",
      "answer": "No. It changes the equity supporting existing exposure; increasing contract size is a separate trade.",
      "sourceIds": [
        "x425-defi-dydx-liquidation"
      ]
    }
  ],
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      "statement": "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.",
      "sourceIds": [
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      "sourceLocators": [
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          "sourceId": "source-abf997db4e47a939",
          "locator": "Liquidity tiers; Market types"
        },
        {
          "sourceId": "source-ba9f2069b72fa7c0",
          "locator": "Margin; fillable price; liquidation"
        }
      ],
      "scope": {
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      "evidenceStatus": "documented",
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        "checkedAt": "2026-10-02T19:18:00.092Z",
        "reviewer": "Independent automated verification — Codex root, separate from the DeFi drafting agent",
        "notes": [
          "Recomputed linear leverage:100×100=10000, /2000=5; loss500 leaves1500, current9500/1500≈6.33. Inverse conventions explicitly separate."
        ]
      }
    },
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      "articleSlug": "leverage-margin-notional",
      "statement": "Initial margin: Opening exposure requires the applicable initial margin.",
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        "notes": [
          "Recomputed linear leverage:100×100=10000, /2000=5; loss500 leaves1500, current9500/1500≈6.33. Inverse conventions explicitly separate."
        ]
      }
    },
    {
      "id": "leverage-margin-notional-fact-maintenance",
      "articleSlug": "leverage-margin-notional",
      "statement": "Maintenance: Continuing exposure requires sufficient account equity.",
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        "source-ba9f2069b72fa7c0"
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      "sourceLocators": [
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        "notes": [
          "Recomputed linear leverage:100×100=10000, /2000=5; loss500 leaves1500, current9500/1500≈6.33. Inverse conventions explicitly separate."
        ]
      }
    },
    {
      "id": "leverage-margin-notional-fact-valuation",
      "articleSlug": "leverage-margin-notional",
      "statement": "Valuation: The cited liquidation model uses oracle-valued positions.",
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        "reviewer": "Independent automated verification — Codex root, separate from the DeFi drafting agent",
        "notes": [
          "Recomputed linear leverage:100×100=10000, /2000=5; loss500 leaves1500, current9500/1500≈6.33. Inverse conventions explicitly separate."
        ]
      }
    }
  ],
  "sources": [
    {
      "id": "x425-defi-dydx-markets",
      "label": "Markets and margin parameters",
      "publisher": "dYdX Foundation",
      "url": "https://docs.dydx.community/dydx/modules/governance/governance-adjustable-parameters/markets",
      "locator": "Liquidity tiers; Market types",
      "note": "Initial/maintenance margin definitions and cross versus isolated market scope.",
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    {
      "id": "x425-defi-dydx-liquidation",
      "label": "Liquidations on dYdX Chain",
      "publisher": "dYdX Operations Services",
      "url": "https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain",
      "locator": "Margin; fillable price; liquidation",
      "note": "Distinguishes eligibility, order execution and account losses.",
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      "url": "https://support.deribit.com/api/v2/help_center/en-us/articles/31424939096093.json",
      "locator": "Settlement process change; Settlement examples",
      "note": "Official support article retrieved through its public Help Center API; inverse settlement specifications.",
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  "related": {
    "articles": [
      "cross-vs-isolated-margin",
      "initial-vs-maintenance-margin",
      "realized-unrealized-trading-pnl",
      "mark-index-last-price"
    ],
    "dossiers": [],
    "wallets": []
  },
  "revisionHistory": [
    {
      "date": "2026-10-02",
      "kind": "published",
      "summary": "First publication after primary-source research and separate automated verification."
    }
  ],
  "citation": "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/"
}