The maintenance margin for Ethereum (ETH) contracts is the minimum amount of capital that traders must maintain in their accounts while holding positions. It is a key element of risk control, aimed at preventing forced liquidation due to severe market fluctuations.
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Core functions of the maintenance margin
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The maintenance margin is the minimum equity standard to ensure account health. Once the account's net value falls below this threshold, the platform will trigger risk control mechanisms, such as margin call notifications.
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It acts as a risk buffer, providing traders with space to cope with adverse fluctuations, preventing positions from being forcibly liquidated when prices change slightly in the opposite direction.
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For the platform, setting a reasonable maintenance margin is a means of managing systemic risk, ensuring the stable operation of the market, and preventing chain liquidation events.
Factors determining the maintenance margin rate
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The regulations of different trading platforms are the primary factor. Major exchanges set unique maintenance margin rates based on their risk control models, which should be referenced in the platform's official announcements.
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The nominal value of the position is a key variable. Generally, the larger the position value, the higher the corresponding maintenance margin rate, which is a tiered margin system.
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Market volatility can also affect margin levels. When market expectations for increased volatility arise, exchanges may temporarily raise maintenance margin requirements to address risks.