# Leverage, margin and notional: the exposure behind a deposit

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.

Evidence: [Markets and margin parameters](https://docs.dydx.community/dydx/modules/governance/governance-adjustable-parameters/markets); [Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain)

Canonical: https://degreesofsatoshi.com/encyclopedia/leverage-margin-notional/
Published: 2026-10-02
Substantively modified: 2026-10-02
Independently verified by an automated reviewer: 2026-10-02T19:18:00.092Z
Data current through: 2026-10-02

AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied.

## Key facts

- **Initial margin:** Opening exposure requires the applicable initial margin. ([Markets and margin parameters](https://docs.dydx.community/dydx/modules/governance/governance-adjustable-parameters/markets))
- **Maintenance:** Continuing exposure requires sufficient account equity. ([Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain))
- **Valuation:** The cited liquidation model uses oracle-valued positions. ([Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain))

## 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.

Evidence: [Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain)

## 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.

Evidence: [Markets and margin parameters](https://docs.dydx.community/dydx/modules/governance/governance-adjustable-parameters/markets); [Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain)

## 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.

Evidence: [Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain); [Inverse Options](https://support.deribit.com/api/v2/help_center/en-us/articles/31424939096093.json)

## Questions

### 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.

Evidence: [Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain)

## Claims and scope

### leverage-margin-notional-quick-answer

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: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null}

### leverage-margin-notional-fact-initial-margin

Initial margin: Opening exposure requires the applicable initial margin.

Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null}

### leverage-margin-notional-fact-maintenance

Maintenance: Continuing exposure requires sufficient account equity.

Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null}

### leverage-margin-notional-fact-valuation

Valuation: The cited liquidation model uses oracle-valued positions.

Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null}

## Sources

- [Markets and margin parameters](https://docs.dydx.community/dydx/modules/governance/governance-adjustable-parameters/markets) — dYdX Foundation. Initial/maintenance margin definitions and cross versus isolated market scope. Locator: Liquidity tiers; Market types. Retrieved: 2026-10-02T18:53:21.108Z.
- [Liquidations on dYdX Chain](https://help.dydx.trade/en/articles/166991-liquidations-on-dydx-chain) — dYdX Operations Services. Distinguishes eligibility, order execution and account losses. Locator: Margin; fillable price; liquidation. Retrieved: 2026-10-02T18:53:20.755Z.
- [Inverse Options](https://support.deribit.com/api/v2/help_center/en-us/articles/31424939096093.json) — Deribit. Official support article retrieved through its public Help Center API; inverse settlement specifications. Locator: Settlement process change; Settlement examples. Retrieved: 2026-10-02T18:53:21.588Z.

## Revision history

- 2026-10-02: First publication after primary-source research and separate automated verification.

## Cite this entry

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/