Leverage & Margin

Understanding leverage and margin is essential for managing risk on Rubicon.

What is Leverage?

Leverage lets you control a larger position with less capital.

Leverage	Position Size	Margin Required	Gain/Loss Multiplier
1x	$1,000	$1,000	1x
2x	$1,000	$500	2x
3x	$1,000	$333	3x

Example:

• SOXX price: $225

• Position: $2,250 (10 contracts)

• Leverage: 5x

• Margin required: $450

If SOXX rises 2% to $229.50:

• Position value: $2,295

• Profit: $45

• Return on margin: 10% (5x leverage × 2% move)

Margin Types

Initial Margin

The collateral required to open a position.

Initial Margin = Position Size / Leverage

For a $1,000 position at 3x leverage:

Initial Margin = $1,000 / 3 = $333

Maintenance Margin

The minimum collateral required to keep a position open. If your margin falls below this level, liquidation begins.

Maintenance Margin ≈ Initial Margin × 0.5 (varies by asset)

Available Margin

Your free collateral that can be used for new positions:

Available Margin = Account Balance - Used Margin + Unrealized PnL

Maximum Leverage

Asset	Max Leverage
SOXX	3x
Korean ETFs	3x

Note: Maximum leverage is currently set to 3x during the beta period. This may increase as liquidity grows.

Higher leverage means:

• Less margin required

• Higher potential returns

• Closer liquidation price

• Greater risk of liquidation

Cross Margin vs Isolated Margin

Cross Margin (Default)

• All positions share the same margin pool

• Unrealized profits can offset other positions

• More capital efficient

• Single liquidation affects entire account

Isolated Margin

• Each position has dedicated margin

• Losses limited to isolated amount

• Less capital efficient

• Protects other positions from liquidation

Calculating Liquidation Price

Your position is liquidated when losses consume your margin.

Long Position:

Liq Price = Entry Price × (1 - 1/Leverage + Maintenance Margin Rate)

Short Position:

Liq Price = Entry Price × (1 + 1/Leverage - Maintenance Margin Rate)

Example — Long 3x:

Entry: $225
Leverage: 3x
Maintenance: 5%

Liq Price = $225 × (1 - 0.33 + 0.05) = $225 × 0.72 = $162.00

A 28% price drop would trigger liquidation.

Margin Ratio

Your account's health is measured by the margin ratio:

Margin Ratio = Maintenance Margin / Account Equity

Margin Ratio	Status
< 80%	Healthy
80-100%	Warning — add margin or reduce position
≥ 100%	Liquidation triggered

Adding Margin

To reduce liquidation risk:

1. Deposit more USDC — Increases account balance

2. Reduce position size — Closes part of position

3. Reduce leverage — Moves liquidation price further

Risk Management Tips

1. Never use max leverage — Leave room for volatility

2. Calculate liquidation before trading — Know your risk

3. Use stop-losses — Exit before liquidation

4. Size positions appropriately — Don't risk more than you can lose

5. Monitor margin ratio — Keep it healthy

6. Consider volatility — ETFs can gap at market open

Leverage Comparison

Leverage	Liq Distance	Risk Level	Use Case
1x	100%	Low	Long-term positions
2x	50%	Medium	Swing trading
3x	33%	Higher	Active trading