Derivatives Trading Mechanism

The New Margin Calculation: Adjustments and Implications

Last updated on 2025-09-18 17:04:44

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Starting Sep 2, 2025, Bybit will implement a major update to the margin calculation algorithm for Perpetual and Expiry contracts. This update changes how Initial Margin (IM) and Maintenance Margin (MM) are calculated — shifting from using the Entry Price to using the Mark Price in certain margin modes. The goal is to better align margin calculations with real-time market conditions and more accurately reflect the actual risk of positions.

Key Adjustments

Cross Margin: IM and MM will be calculated based on the Mark Price instead of the Entry Price.
Isolated Margin: MM will be calculated using the Mark Price, while IM will continue to be based on the Entry Price. The liquidation price formula will be updated, but the value will remain fixed, consistent with the current experience.
Portfolio Margin: No adjustment.
Risk Limit: The risk limit tier will now adjust dynamically based on the real-time Mark Price and the combined value of positions and orders.

Updated Margin Calculation Logic

The following tables summarize how margin calculations will change across margin modes and contract types.

1. USDT/USDC Contracts — Isolated Margin Mode (One-Way + Hedge Modes)

	Current (Based on Entry Price)	New (Mark Price Introduced)
Position Value	USDT: Position Size × Average Entry Price	Position Size × Mark Price
Position IM	USDT: (Position Size × Average Entry Pricee ÷ Leverage) + [Entry Price × Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	No change
Position MM	USDT: [(Position Size × Average Entry Price × MM Rate) − MM Deduction] + [Position Size × Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	USDT: [(Position Size × Mark Price × MM Rate) − MM Deduction] + [Position Size × Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate] USDC: No change

2. USDT/USDC Contracts — Cross Margin Mode (One-Way Mode)

	Current (Based on Entry Price)	New (Mark Price Introduced)
Position Value	Position Size × Average Entry Price	Position Size × Mark Price
Position IM	(Position Size × Average Entry Price ÷ Leverage) + [Entry Price × Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	USDT: (Position Size × Mark Price ÷ Leverage) + [Entry Price × Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate] USDC: No change
Position MM	[(Position Size × Average Entry Price × MM Rate) − MM Deduction] + [Position Size × Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	USDT: [(Position Size × Mark Price × MM Rate) − MM Deduction] + [Position Size × Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate] USDC: No change

3. USDT/USDC Contracts − Cross Margin Mode (Hedge Mode)

	Current (Based on Entry Price)	New (Mark Price Introduced)
Position Value	Position Size × Average Entry Price	Position Size × Mark Price
Position IM	Position with a larger position size: (Average Entry Price × Hedged Position Size ÷ Leverage) + [Average Entry Price × Hedged Position Size (1 ± 1 ÷ Leverage) × Taker Fee Rate × 2] + (Average Entry Price × Net Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate) When fully hedged, net position size = 0 Position with a smaller position size: Average Entry Price × Hedged Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate × 2	USDT: Position with a larger position size: (Mark Price × Hedged Position Size ÷ Leverage) + [Entry Price × Hedged Position Size (1 ± 1 ÷ Leverage) × Taker Fee Rate × 2] + (Entry Price × Net Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate) When fully hedged, net position size = 0 Position with a smaller position size: No change USDC: No Change
Position MM	Position with a larger position size: [(Average Entry Price × Net Position Size × MM Rate) − MM Deduction] + [Average Entry Price × Hedge Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate × 2] + [Average Entry Price × Net Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate] When fully hedged, net position size = 0 Position with a lower position size: Average Entry Price × Hedged Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate × 2	USDT: Position with a larger position size: [(Mark Price × Net Position Size × MM Rate) − MM Deduction] + [Entry Price × Hedge Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate × 2] + [Entry Price × Net Position Size × (1 ± 1 ÷ Leverage) × Taker Fee Rate] When fully hedged, net position size = 0 Position with a lower position size: No change USDC: No Change

4. Inverse Contracts — Isolated Margin Mode (Only One-Way Mode)

	Current (Based on Entry Price)	New (Mark Price Introduced)
Position Value	Position Size ÷ Entry Price	Position Size ÷ Mark Price
Position IM	[(Position Size ÷ Entry Price) ÷ Leverage] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	No change
Position MM	[(Position Size ÷ Entry Price × MM Rate) − MM Deduction] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	[(Position Size ÷ Mark Price × MM Rate) − MM Deduction] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]

5. Inverse Contracts — Cross Margin Mode (Only One-Way Mode)

	Current (Based on Entry Price)	New (Mark Price Introduced)
Position Value	Position Size ÷ Entry Price	Position Size ÷ Mark Price
Position IM	[(Position Size ÷ Entry Price) ÷ Leverage] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	[(Position Size ÷ Mark Price) ÷ Leverage] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]
Position MM	[(Position Size ÷ Entry Price × MM Rate) − MM Deduction] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]	[(Position Size ÷ Mark Price × MM Rate) − MM Deduction] + [Position Size ÷ Entry Price × (1 ± 1 ÷ Leverage) × Taker Fee Rate]

Example: Impact Comparison

Let's examine the difference in margin requirements using USDT Cross Margin mode in a falling market scenario.

Position Setup:

Symbol: BTCUSDT
Side: Long
Size: 2 contracts
Entry Price: 94,694.80
Leverage: 10x
MM Rate: 0.5%
Taker Fee Rate: 0.055%
Wallet Balance: 20,000 USDT
Collateral Value Ratio: 0.99

If the Mark Price drops to 85,315.15, the position details, account IMR and MMR are as follows:

Based on the old calculation (using Entry Price):

IM = (94,694.80 × 2 ÷ 10) + (94,694.80 × 2 × (1 − 1 ÷ 10) × 0.00055) = 19,032.71
MM = (94,694.80 × 2 × 0.005) + (94,694.80 × 2 × (1 − 1 ÷ 10) × 0.00055) = 1,040.70
Unrealized PnL = (85,315.15 − 94,694.80) × 2 = -18,759.30
Margin Balance = 20,000 × 0.99 − 18,759.30 = 1,040.70
IMR = 19,032.71 ÷ 1,040.70 = 1,828.84%
MMR = 1,040.70 ÷ 1,040.70 = 100%

Based on the new calculation (using Mark Price):

IM = (85,315.15 × 2 ÷ 10) + (94,694.80 × 2 × (1 − 1 ÷ 10) × 0.00055) = 17,156.77
MM = (85,315.15 × 2 × 0.005) + (94,694.80 × 2 × (1 − 1 ÷ 10) × 0.00055) = 946.90
Other values remain unchanged.
IMR = 17,156.77 ÷ 1,040.70 = 1,648.59%
MMR = 946.90 ÷ 1,040.70 = 90.99%

Conclusion:

In this scenario, the new logic results in lower IM and MM, which delays liquidation and improves capital efficiency during adverse market movements.

Overall User Impact Summary

Contract Type	Margin Mode	Direction	Market Trend	Impact After the New Algorithm Launch
USDT/USDC Contracts	Cross Margin	Long	Up	The increased Initial Margin will lock more unrealized profit in the position, reducing the amount of unrealized profit available for opening new positions compared to the old logic.
		Long	Down	Liquidation will be triggered later.
		Short	Up	Liquidation may be triggered earlier.
		Short	Down	The decreased Initial Margin will lock less unrealized profit in the position, increasing the amount of unrealized profit available for opening new positions compared to the old logic.
	Isolated Margin	Long	Up	No impact
		Long	Down	Liquidation will be triggered later.
		Short	Up	Liquidation may be triggered earlier.
		Short	Down	No impact
Inverse Contracts	Cross Margin	Long	Up	The decreased Initial Margin will lock less unrealized profit in the position, increasing the amount of unrealized profit available for opening new positions compared to the old logic.
		Long	Down	Liquidation may be triggered earlier.
		Short	Up	Liquidation will be triggered later.
		Short	Down	The increased Initial Margin will lock more unrealized profit in the position, reducing the amount of unrealized profit available for opening new positions compared to the old logic.
	Isolated Margin	Long	Up	No impact
		Long	Down	Liquidation may be triggered earlier.
		Short	Up	Liquidation will be triggered later.
		Short	Down	No impact

Impact on Risk Limit Tiers

Under the old logic, your risk limit tier only changed when you opened or closed positions or orders.

With the new logic, your tier will change automatically based on the real-time Mark Price. As the Mark Price moves, your position value may increase or decrease, which can push your position into a different tier. This triggers a real-time recalculation of your required Maintenance Margin.

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