How Is Margin Conceptually Similar to the Collateral Required for a DeFi Loan?

Both margin in futures trading and collateral in decentralized finance (DeFi) lending serve as a guarantee of performance. Margin ensures the trader can cover potential losses on a leveraged position.

Collateral in DeFi is an asset locked by the borrower to secure a loan, ensuring the lender can recover their funds if the borrower defaults. Both mechanisms manage counterparty risk by requiring a deposit to cover potential financial obligations, though margin is often dynamic while collateral is fixed.