Per-Market Leverage

Per-Market leverage introduces market specific leverage limits, giving traders finer control over their positions while improving account safety.

Instead of every position sharing a single account level limit, each perpetual market now defines its own maximum leverage cap.

This allows higher leverage on stable assets and stricter limits on more volatile ones.

How Per-Market Leverage Works

Each perpetual position stores its own max_margin_ratio, which defines the maximum leverage allowed for that market.

When checking a position, Drift compares:

effective_margin_ratio = min(position.max_margin_ratio, account.max_margin_ratio)

The lower value is always used, ensuring positions can’t exceed the most conservative limit.

From this ratio, the protocol calculates the maximum position size a trader can open with their available collateral, and the liquidation threshold for that specific position.

Risk and Control

Previously, all risk was managed at the account level, which meant that a large loss in one market could impact every position.

With per-market leverage, each market is evaluated independently. Furthermore, per-market leverage gives traders more flexibility and control:

• Apply different leverage levels for different strategies or market conditions.
• High-risk markets can be capped without restricting more stable ones.
• Because risk is contained at the market level, traders eliminate the chance of cascading liquidations.
• Each market’s leverage and liquidation levels are clear and more predictable.

Code Implementation

Files and functions

Per-market leverage logic is implemented in:

• perp_positions.rs stores max_margin_ratio
• updateUserPerpPositionCustomMarginRatio updates per position settings

Implementation can be found here