Leverage and margin
Leverage does not give you more money. It enlarges the position your margin controls, and it moves your liquidation price closer in exact proportion.
Margin is the money you commit to a position. Leverage is a multiplier applied to that margin to decide how large a position it controls. The product of the two is notional, the dollar value of the exposure you actually hold.
Nothing is borrowed into your balance. Raising leverage from 5x to 20x does not add funds. It takes the same margin and makes it responsible for four times the exposure, which means every price move counts four times as much against it.
The relationship
notional = margin x leverage
size = notional / entry price
pnl = size x (mark price - entry price) long
pnl = size x (entry price - mark price) shortIn the demo you choose market, side, margin and leverage. Everything else is computed server-side from the live price: entry, size, collateral and liquidation price. The client cannot assert any of them. See the demo terminal for the full request path.
Where liquidation sits
A demo position is liquidated when its loss reaches 90% of the margin. The remaining 10% is returned to your balance. Because loss is proportional to notional and notional is proportional to leverage, the price move required to lose 90% of margin shrinks as leverage grows.
liquidation price (long) = entry x (1 - 0.9 / leverage)
liquidation price (short) = entry x (1 + 0.9 / leverage)
adverse move to liquidation = 0.9 / leverageThe exact moves
This is the whole argument about leverage in one table. The third column is not an estimate. It is 0.9 divided by the leverage.
| Leverage | Notional on 1,000 margin | Adverse move to liquidation |
|---|---|---|
| 2x | 2,000 | 45.00% |
| 5x | 5,000 | 18.00% |
| 10x | 10,000 | 9.00% |
| 15x | 15,000 | 6.00% |
| 20x | 20,000 | 4.50% |
| 25x | 25,000 | 3.60% |
| 40x | 40,000 | 2.25% |
| 100x | 100,000 | 0.90% |
A worked example
Long, 1,000 margin, 20x leverage, entry 40.00. Taker fee is 0.06% and it is charged on notional, on open and again on close, which is the industry convention.
notional = 1,000 x 20 = 20,000
size = 20,000 / 40.00 = 500 units
open fee = 20,000 x 0.0006 = 12.00
liq price = 40.00 x (1 - 0.9/20) = 38.20
price 41.00 -> pnl = 500 x 1.00 = +500.00
price 39.00 -> pnl = 500 x -1.00 = -500.00
price 38.20 -> pnl = 500 x -1.80 = -900.00 liquidated, 100 returnedNote the fee. On 1,000 of margin at 20x you pay 12.00 to open and roughly 12.00 to close, so the position starts about 2.4% of margin behind. At 5x the same 1,000 of margin pays 3.00 each way. Leverage scales your costs at exactly the rate it scales your exposure.
The per-market cap
Every demo market has its own maximum leverage, derived from that market's real liquidity depth on-chain. Deep pools tolerate large positions. Thin pools do not, and a thin pool is also cheap to push around, so the cap is lower.
| Pool liquidity | Maximum leverage |
|---|---|
| Above 2,000,000 | 25x |
| Above 500,000 | 20x |
| Above 100,000 | 15x |
| Above 25,000 | 10x |
| Below that | Floor for the asset class |
The floor differs by asset class. It is 10x for tokenized equities and 5x for crypto. A tokenized equity tracks a real instrument with its own price discovery elsewhere, so a shallow pool on this chain is far less manipulable than a memecoin pool of the same size, where the on-chain pool is the only price that exists.
Caps are read from live pool data, refreshed every 20 seconds or so, so a market's cap can change as liquidity moves. Anyone can open a demo market for an asset that does not have one, for an on-chain fee of 0.01 ETH, and its cap is derived the same way.
Holder tiers
Holding PERPS raises the leverage ceiling available to you. Tiers read the on-chain balance, so they cannot be faked.
| Tier | PERPS held | Leverage bonus |
|---|---|---|
| Unranked | 0 | +0 |
| Bronze | 10,000 | +5 |
| Silver | 100,000 | +10 |
| Gold | 1,000,000 | +20 |
| Diamond | 10,000,000 | +50 |
The bonus adds to the market cap and the overall result is hard capped at 100x. Access to higher leverage is not an argument for using it. At 100x a 0.9% move against you closes the position. Read the token page in the token docs before assuming a tier is useful to you.
Real trading differs
On the real terminal leverage goes up to 40x across more than 300 markets, and the formula above is an approximation rather than a rule. Real liquidation is set by the venue's risk engine using a maintenance margin that varies by asset and by position size, and it moves as your position grows. Funding is also charged and received periodically between traders, which adds a carrying cost the demo does not model.
Choosing a number
- Decide the loss you are willing to take. That is your margin, not your account.
- Decide how far the asset can move against you before your thesis is wrong.
- Divide 0.9 by that move. The result is the highest leverage that survives it.
- Take less than that, because fees and funding eat into the same margin.
A 6% tolerance gives 15x. A 10% tolerance gives 9x. Working in this direction sets leverage from the asset's behaviour instead of from what the slider allows.