> For the complete documentation index, see [llms.txt](https://risk.infinity.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://risk.infinity.exchange/portfolio-margin/maintenance-margin.md).

# Maintenance Margin

Portfolio Margin is designed to provide traders with potentially better leverage and flexibility in market positioning, alongside more efficient risk management. 

**Maintenance Margin** (denoted, "MM") is one of the core tenets of Portfolio Margin. MM is the minimum amount of margin (each user's "NAV Threshold") that you must hold in your Trading Account, below which liquidation would start.

* MM is NAV less Stressed NAV (denoted, "StrNAV"), or *MM = NAV - StrNAV*
* MM expressed as a percentage (denoted, "MM%") is MM divided by NAV, or *MM% = MM / NAV*

The purpose behind StrNAV is to calculate your adjusted NAV (recall, your Assets + Liabilities) for a parameter of stress scenarios. These stress scenarios draw from previous and potential market conditions to simulate liquidation under adverse conditions, and thereby the reasonable loss that your NAV would be calculated to incur under various market conditions (outlined under Risk Matrix, in the next section) taking into account Market Risk and Liquidity and Depeg Risk. Other risk components such as Credit and Operational risks are highlighted for user's reference. 

The parameters to calculate StrNAV are updated and calculated every 10 minutes, on a continuous basis, from which an implied liquidation penalty (denoted, "liqPenaltyFee") is added. In essence, MM represents the delta between your NAV and StrNAV, the latter of which would decrease (and increase the delta, or MM) as you create new positions, whether lending or borrowing, as their present value is stressed against the prevailing market rates.

$$
MM=NAV-StrNAV   \ StrNAV >0 ⇔ NAV>MM ⇔ MM%<100%
$$

When your NAV drops below your NAV Threshold, liquidation will begin to reduce (and pay back) your liabilities by selling some of your Assets (recall, your Cash + PV(Lending Positions)):

$$
MM=MM(L)+\frac{PV(L)}{{PV(A)}}\times MM(A)+liqPenaltyFee
$$

The *liqPenaltyFee* is calculated by a 5% buffer on your notional Assets, adjusted by the present value of your liabilities over assets:

$$
liqPenaltyFee=5%\times\frac{PV(L)}{{PV(A)}}\times Notional(A)
$$

Under the Portfolio Margin approach, MM is used to calculate your Initial Margin and Health Score, outlined in the next section.


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