# Margin Requirement

<mark style="color:$info;">Liquidation occurs when a position's</mark> **remaining collateral is no longer sufficient to support its leveraged exposure at current market prices**. <mark style="color:$info;">At that point, the system closes the position and unwinds the associated hedge.</mark>

<mark style="color:$info;">A position is liquidated when</mark> **unrealized losses reduce the collateral buffer** <mark style="color:$info;">below the minimum required to maintain the position.</mark>

<mark style="color:$info;">Once this threshold is reached, Multiply executes a full close-out to ensure the exposure can still be</mark> **unwound at a bounded cost, given available market liquidity and fees**<mark style="color:$info;">.</mark>

<mark style="color:$info;">Liquidation is therefore triggered by the relationship between collateral, leverage, fees, and current market prices. The system closes the position as soon as it can no longer be maintained within its defined safety parameters.</mark>

<mark style="color:$info;">The liquidation price is computed from:</mark>

* <mark style="color:$info;">entry price and current leverage</mark>
* <mark style="color:$info;">modeled cost to unwind the hedge under conservative execution assumptions</mark>
* <mark style="color:$info;">liquidation buffer sized to absorb tail slippage beyond modeled cost</mark>
* <mark style="color:$info;">venue fees and gas costs where applicable</mark>
* <mark style="color:$info;">accrued time-based fees owed to Multiply</mark>


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