Skip to main content

Explain How a Lack of Finality Could Lead to a ‘Margin Call’ Failure.

A margin call occurs when the collateral (margin) in a derivatives account falls below a required maintenance level, prompting the trader to deposit more funds. If the underlying blockchain lacks finality, the transaction used to deposit the additional margin could be reversed or invalidated by a chain re-organization.

This failure to secure the margin deposit could lead to the forced liquidation of the trader's position, even if they attempted to meet the call.

In the Context of Derivatives, How Does a Margin Call Relate to the Concept of Impermanent Loss?
What Is the Consequence of Failing to Meet a Margin Call?
How Does a ‘Margin Call’ Differ from an Automatic Liquidation in Leveraged Trading?
What Are the Consequences of Failing to Meet a Margin Call Promptly?