USDT-margined Ladder Maintenance Margin Rate

The ladder maintenance margin rate system is a risk control mechanism designed for the USDT-margined perpetual contracts. This system applies different maintenance margin requirements based on position size, ensuring that larger positions maintain higher margin ratios to manage systemic risk effectively.

Understanding Maintenance Margin

The maintenance margin is the minimum amount of margin required to keep a position open. When a user's margin ratio falls below the maintenance margin rate plus the closing fee rate, the position is at risk of liquidation.

The margin ratio is calculated using the following formula:

Margin Ratio = (Position Margin + Unrealized PnL) / Position Value × 100%

Ladder Maintenance Margin Rate System

For USDT-margined perpetual contracts, the maintenance margin rate increases as the position size grows. This ladder system is designed to ensure that larger positions, which pose more significant systemic risk, maintain higher margin requirements.

Below is the ladder maintenance margin rate structure for USDT-margined contracts:

Position Tier (Notional Value)	Maintenance Margin Rate
Tier 1: < 50,000 USDT	0.5%
Tier 2: 50,000 - 250,000 USDT	0.65%
Tier 3: 250,000 - 1M USDT	0.8%
Tier 4: 1M - 5M USDT	1.0%
Tier 5: > 5M USDT	1.5%

Note: The specific tier thresholds and maintenance margin rates may vary by contract and are subject to adjustment based on market conditions.

Implications for Leverage

The ladder maintenance margin rate directly impacts the maximum leverage a user can employ. As the maintenance margin rate increases with position size, the maximum available leverage decreases.

The relationship between maintenance margin rate and maximum leverage can be approximated using the following formula:

Maximum Leverage ≈ 1 / Maintenance Margin Rate

For example:

• Tier 1 (0.5% maintenance margin) allows up to approximately 200x leverage
• Tier 5 (1.5% maintenance margin) allows up to approximately 66.7x leverage

However, the platform may impose additional restrictions on maximum leverage beyond this calculation.

Partial Liquidation Mechanism

For positions in Tier 2 and above, a partial liquidation mechanism is employed to manage risk more effectively:

1. When the margin ratio falls below the current tier's maintenance margin rate but remains above the Tier 1 maintenance margin rate, the system will perform a partial liquidation.
2. The system calculates how many contracts need to be reduced to bring the position down by two tiers.
3. After the partial reduction, if the margin ratio meets the new tier's requirements, the process stops; otherwise, it continues until the position reaches an acceptable margin ratio or is completely liquidated.

During partial liquidation, the position is frozen, and no operations can be performed on it until the process completes.

Risk Management Best Practices

To avoid liquidation under the ladder maintenance margin rate system:

1. Monitor Position Size: Be aware of which tier your position falls into and the corresponding maintenance margin requirements.
2. Maintain Adequate Margin: Keep your margin ratio well above the maintenance margin rate for your position tier.
3. Consider Tier Thresholds: When increasing position size, be mindful of tier thresholds and the impact on maintenance margin requirements.
4. Use Risk Management Tools: Set take-profit and stop-loss orders to manage risk effectively.
5. Add Margin Proactively: During volatile market conditions, consider adding margin to your positions proactively to avoid liquidation.