BeaconMaintenance Margin Defined
Maintenance margin is the minimum amount of collateral you must hold in your account to keep a leveraged position open. It is the line in the sand between an active position and a liquidation. When your account equity drops below the maintenance margin requirement, the exchange will begin the process of force-closing your position to prevent further losses.
Think of maintenance margin as the minimum balance your position needs to stay alive. You start with initial margin (the deposit required to open the position), and as the trade moves against you, your effective margin decreases. Once it hits the maintenance margin level, the exchange intervenes to protect itself and other traders from the risk of your position going further underwater.
How Maintenance Margin Triggers Liquidation
The liquidation process is straightforward. At all times, the exchange monitors your margin ratio - the ratio of your current equity to your position value. This ratio is compared against the maintenance margin rate for your asset and position size. When your margin ratio drops to or below the maintenance margin rate, liquidation is triggered.
For example, suppose you open a $10,000 long position on BTC with 10x leverage ($1,000 of margin). If the maintenance margin rate is 0.5%, you need at least $50 of equity to maintain the position. Your position would be liquidated when your losses reach $950 - which corresponds to roughly a 9.5% price drop from your entry.
The exchange checks your margin ratio against the mark price, not the last traded price. This protects you from being liquidated by temporary price wicks or manipulation. Your liquidation price is calculated in advance and displayed in the trading interface so you always know your risk threshold.
Maintenance Margin Calculation
The basic formula for maintenance margin is: Maintenance Margin = Position Value multiplied by Maintenance Margin Rate. The maintenance margin rate varies by asset and sometimes by position size. For major crypto assets on Hyperliquid, maintenance margin rates typically range from 0.5% to 2.5%.
Your margin ratio is calculated as: Margin Ratio = Account Equity divided by Position Value. When the margin ratio equals the maintenance margin rate, you are at the liquidation threshold. Account equity includes your deposited collateral plus any unrealized PnL from open positions.
In cross margin mode, maintenance margin is calculated against your entire account balance. In isolated margin mode, it is calculated only against the margin assigned to that specific position. Use the liquidation calculator to determine your exact maintenance margin and liquidation price.
Relationship to Leverage
Leverage and maintenance margin are inversely related concepts. Higher leverage means a larger position relative to your margin, which means less room for adverse price movement before hitting the maintenance margin threshold. At 2x leverage, a 50% price drop would be needed to wipe out your margin. At 20x leverage, just a 5% drop achieves the same result.
This is why understanding maintenance margin is so critical for leveraged trading. The higher your leverage, the closer your effective margin is to the maintenance threshold from the moment you open the position. With 100x leverage and a 0.5% maintenance margin rate, you are already starting very close to the liquidation line.
Smart risk management means choosing a leverage level that gives you enough distance between your current margin and the maintenance threshold. This buffer is what allows your position to survive normal price fluctuations without being prematurely liquidated.
How to Stay Above Maintenance Margin
The simplest way to maintain a safe margin ratio is to use conservative leverage. If you are comfortable with 10x but only truly need 3x, the extra buffer can save your position during volatile periods. It is better to have unused margin capacity than to be liquidated during a temporary dip.
Setting stop-loss orders is another effective approach. A stop-loss will close your position at a predetermined price before it reaches the liquidation threshold, giving you control over your maximum loss rather than leaving it to the liquidation engine.
You can also add margin to an existing position if it is moving against you. In isolated margin mode, adding margin directly pushes the liquidation price further from the current price. In cross margin mode, depositing additional USDC to your account achieves the same effect. Monitor your margin ratio regularly and act before it reaches critical levels.