Capital and risk
Initial and maintenance margin
Understand the two margin thresholds that control whether a perpetual position can be opened and kept open.
Also called: initial margin, maintenance margin, IM and MM
Definition
Initial and maintenance margin — Initial margin is the minimum eligible equity a venue requires to open or increase a leveraged position. Maintenance margin is the lower ongoing threshold required to keep that exposure open. When account or position equity falls below the applicable maintenance requirement, the venue can reduce or liquidate exposure according to its rules.
In plain English
Initial margin is the admission requirement for new exposure. Maintenance margin is the safety floor after the position exists. A trader can therefore have enough equity to keep an existing position open but not enough to make it larger.
Margin rules manage the venue’s exposure to loss; they do not describe the trader’s preferred risk limit. Waiting until the maintenance threshold is reached hands control to an automated liquidation process.
How it works
Venues commonly express requirements as a percentage of notional value, a tiered schedule, or a risk model. Larger or less liquid positions may carry a higher rate. Cross-margin systems calculate requirements across a portfolio, while isolated systems focus on the collateral assigned to a position.
Account equity changes with unrealized PnL, collateral value, fees, and funding. When equity falls below initial margin, new risk is usually restricted. When it falls below maintenance margin, liquidation rules can activate.
Why it matters
The distance between current equity and maintenance margin is a more useful warning than the headline leverage limit. Funding costs, adverse price moves, or a falling collateral asset can consume that buffer even if the trader does not change the position.
Worked example
Assume a venue requires 10% initial margin and 6% maintenance margin for a $20,000 position. Opening it requires $2,000 of eligible equity. Keeping it open requires $1,200.
If losses and costs reduce position equity to $1,150, it is $50 below the simplified maintenance requirement. The venue may begin reducing or liquidating exposure. The example excludes tier changes and venue-specific buffers.
How it works on Lynx
Lynx does not describe position risk through a conventional initial-margin and maintenance-margin schedule. A trader chooses position collateral and leverage, while the documented liquidation boundary is based on Net PnL losses and accumulated fees reaching 85% of that position collateral.
The generic IM/MM model is useful for comparing venues, but on Lynx the relevant interface values are position collateral, leverage, accumulated costs, Net PnL, and the estimated liquidation level.
Common misconception
Maintenance margin is not extra money charged when a position loses. It is the minimum equity threshold the position or account must continue to satisfy.
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Related definitions and practical guides.
Sources and review
Written by Lynx Editorial. Reviewed by Lynx Protocol Team on July 31, 2026. Review policy.