# Margin, leverage, and liquidations

#### Collateral

When you deposit USDC into MoveX, it moves into the Hub contract. The Hub tracks two buckets per user:

* **`available`** — free collateral you can use for new orders or withdraw.
* **`locked`** — collateral committed to open positions (across all markets).

When you place an order with leverage, the system locks `notional / leverage` from your available balance. As your position is filled and confirmed on-chain, that locked collateral moves from the Hub into the Market contract that holds the position.

#### Leverage

MoveX currently supports **1×, 2×, and 3× leverage**. (This may expand as risk parameters allow.)

Leverage works the way you'd expect. A $300 position at 3× requires $100 of collateral. A $300 position at 1× requires $300 of collateral. Higher leverage means a smaller move in the mark price wipes out your collateral — and triggers a liquidation.

#### Mark price

The mark price is the protocol's reference for "what is this position worth right now?" It's computed continuously from the oracle:

```
mark_price = | underlying_now − reference_price_of_epoch |
```

PnL on your position is computed against the **MID price** of the OrderBook:

```
unrealized_pnl = direction_sign × (mid_price − entry_price) × size
```

Where `direction_sign` is `+1` for longs and `−1` for shorts.

#### Liquidation

A position is **liquidatable** when its `account_value` falls below the maintenance margin threshold. Roughly:

```
account_value = collateral + unrealized_pnl
maintenance_margin = notional × maintenance_margin_ratio
position_liquidatable_if  account_value < maintenance_margin
```

The maintenance margin ratio is per-market (typically 5%). When a position crosses this threshold, the liquidation engine force-closes it.

The closing fill can match against the order book if there's available liquidity, or be absorbed by the **Insurance Fund** if the book is empty. The Insurance Fund is a per-market pool of USDC funded by a portion of trading fees; it acts as the counterparty of last resort.

If the Insurance Fund is depleted and there's still bad debt (position lost more than its collateral), MoveX may apply **socialized loss** - a small haircut spread across all profitable positions in the market. This is a tail risk that we work hard to avoid through conservative leverage limits.


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