margin is the collateral you post to open and maintain a leveraged position. it is the chunk of your wallet the protocol locks up as a guarantee that any losses you take can be paid. there are two flavors that matter: initial margin (the amount required to open) and maintenance margin (the minimum required to keep the position alive). drop below maintenance and you get liquidated.
in plain english
margin is the chip you put on the table. the casino does not let you bet 1000 dollars with an empty wallet, but a perp protocol will let you bet 1000 dollars of exposure with 10 dollars of collateral, as long as that 10 dollars stays on the table. when the trade loses enough to threaten the protocol's solvency, the chip gets seized and the position closes.
initial margin vs maintenance margin
these two numbers control your whole risk envelope:
- initial margin: the collateral needed to open. determined by your chosen leverage. 100x leverage means 1 percent initial margin.
- maintenance margin: the minimum collateral to keep the position open. usually a fraction of initial, often 0.5 percent to 1 percent of notional on majors.
- free margin: collateral in your wallet not currently locked in positions.
- used margin: collateral currently allocated to open positions.
why margin exists
leverage means the protocol is exposed to losses larger than what you posted. margin is the buffer that absorbs adverse moves before the protocol itself has to eat the loss. it is the entire reason leveraged perps can function without a counterparty going insolvent on every losing trade.
how it shows up on uponly.win
your in-app wallet holds usdc on base. when you choose collateral size and leverage and tap rip, that collateral becomes the initial margin for the position routed to avantis. you can see it locked against the trade until you close. the size you pick is the only money at risk on that rip. for the bigger picture on uponly's no-house, no-pool model, see how uponly was built in one night.
common confusions
margin is not a fee. it is collateral that is locked, not spent. you get it back when you close a profitable trade. you lose it when you close at a loss (or get liquidated). margin is also not the same as leverage: margin is the dollar amount you post, leverage is the multiplier that turns it into notional exposure. they are inversely related: high leverage means low margin per unit of exposure.
- margin is collateral, not a fee.
- higher leverage means less margin required per unit of exposure.
- maintenance margin is what really triggers liquidation, not initial margin.
- in cross-margin, all your free balance counts as backstop for every position.
see also
- isolated vs cross margin
- leverage definition
- liquidation price definition
- perpetual future definition
- funding rate definition
to see margin lock and unlock in real time, open uponly, fund a tiny in-app balance, and rip a small position. closing it returns the margin (plus or minus pnl) to your wallet immediately.