Margin
Collateral · Initial margin · Maintenance margin
Collateral you lock up to open and hold a futures or leveraged position: initial margin to open it, and maintenance margin as the minimum it must keep.
Simple explanation
Background: Korea's won exchanges (Upbit, Bithumb, Coinone and Digital X, formerly Korbit) offer spot trading only, so Korean investors who trade futures on margin do it on overseas exchanges such as Binance.
In futures you do not pay the full value of a position. You put up part of it as collateral, and that collateral is the margin. It is less a down payment on the coin than a deposit guaranteeing that you can cover your losses if the price moves against you.
The money needed to open a position is the initial margin, and it equals position size ÷ leverage. A ₩10,000,000 (about $7,100) position at 10x needs ₩1,000,000 (about $700); at 20x it needs ₩500,000. Choosing your leverage is therefore choosing how much margin to post. Many exchanges, Binance among them, lower the maximum leverage in tiers as a position grows.
The maintenance margin is the minimum that must remain for the position to stay open. Binance works it out as the position's notional value × a maintenance margin rate, minus a fixed amount for each tier, and bigger positions get higher rates. When your margin plus unrealized profit or loss shrinks to that level, the exchange closes the position for you (liquidation). Rates differ by exchange, coin and position size, and they change.
There are two margin modes. Isolated margin backs a position only with the margin assigned to it, so a liquidation costs at most that margin. Cross margin lets all your positions share the whole futures balance: gains elsewhere add to your margin and losses eat into it, so the liquidation price keeps moving. Liquidation comes later, but when it comes it can take the whole balance.
To push the liquidation price further away, add margin or lower your leverage; taking margin out pulls it closer. Trading fees and funding payments are also taken from (or paid into) your margin, so the liquidation price drifts the longer you hold. In USDT-margined contracts, margin and profit are counted in Tether; in coin-margined contracts the collateral itself is a coin such as bitcoin, so a falling price hits both your position and the value of your margin.
Korean exchanges have no futures, but their coin-lending services also run on collateral and can force-liquidate a borrower when the collateral loses value. Since September 2025, lending guidelines run as DAXA self-regulation have barred lending beyond the collateral's value and require a warning to users before a likely liquidation. Overseas exchanges, for their part, often sit outside Korea's user-protection rules.
Margin matters for the kimchi premium too. Traders who hedge a premium trade with a short on overseas futures need separate margin on the overseas exchange to carry that short. Funding it with USDT bought in Korea adds the Tether premium, and if the margin is thin and the price spikes, the short can be liquidated first and the hedge breaks. CoinGaja does not show futures margin or liquidation prices, but its Kimchi Premium Calculator and Live Tether premium page show the spot-side costs and the Tether price.
Example
Bitcoin at ₩100,000,000: a 0.1 BTC long (a ₩10,000,000 position) at 10x → initial margin = 10,000,000 ÷ 10 = ₩1,000,000 (about $700)
Maintenance margin rate 0.5% (assumed) → maintenance margin = 10,000,000 × 0.5% = ₩50,000
Isolated margin: liquidated when the loss reaches 1,000,000 − 50,000 = ₩950,000 → a move of about -9.5%, liquidation price about ₩90,500,000
Add ₩500,000 of margin to the same position → it can absorb 1,500,000 − 50,000 = ₩1,450,000 → about -14.5%, liquidation price about ₩85,500,000
Cross margin with the whole ₩3,000,000 futures balance as collateral → it survives about -29.5% (about ₩70,500,000), but a liquidation can cost nearly all of the ₩3,000,000
Fees and funding are left out, and losses are simplified to the position size at entry (each exchange's formula differs a little)
※ Example numbers, for illustration only
See it on CoinGaja
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