Leverage
Perpetual Protocol allows traders to use leverage by backing a position with a margin—collateral that is worth less than the total position size. Traders can open positions with leverage up to 10x.
Note that an effective leverage of 16x, equivalent to a margin ratio of 6.25%, is the point at which your position can be liquidated.
⚠️ Using leverage puts your funds at risk of liquidation at any time. Be sure you understand the risks of leveraged trading before proceeding.
Example
You can open an ETH long position worth 1000 USDC backed by a margin of 100 USDC. Your margin ratio is 10%, equivalent to a leverage of 10x. If ETH falls in value, you start to lose money, resulting in a negative PnL. PnL is added to your margin, so in our example, your margin will start to go below 100 USDC, in turn decreasing your margin ratio. If the margin ratio falls to 6.25%, then your position may be liquidated.