How Does the Exchange Dynamically Adjust Maximum Allowable Leverage?

Exchanges dynamically adjust the maximum allowable leverage primarily based on the asset's volatility and the trader's position size (tiered margin). If an asset experiences extreme volatility, the exchange will lower the maximum leverage to reduce systemic risk.

Similarly, for larger positions, the maximum leverage is reduced to ensure that the required margin provides a sufficient safety buffer against potential losses, protecting the exchange and the insurance fund.