If your margin decreases, your credit will be automatically recategorized to the next level.
Example:
If your initial margin was 400%, and it drops below 200%, it will automatically move to a higher interest rate category.
Current Margin | Applied APR |
Above 200% | 5% |
Below 200% | 9.75% |
Below 150% | 13.5% |
Below 120% | Forced liquidation |
Keep in mind that your margin may decrease if:
The value of your collateral drops, or
You withdraw part of your existing collateral.
Maintaining a healthy margin not only lowers the risk of liquidation but also allows you to keep a lower interest rate.