> For the complete documentation index, see [llms.txt](https://interfinex.gitbook.io/interfinex/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://interfinex.gitbook.io/interfinex/how-it-works/margin-trading/positions.md). # Positions ### Borrowing Users can borrow funds from the funding pool. **Collateral** is the amount of tokens a user deposits in addition to the amount he is borrowing from the pool. In addition to collateral, users must also post **maintenance margin** - This can be thought of as insurance on the borrowed amount. The amount a user borrows relative to the amount of collateral he posts is called his **leverage**. Each market has limits on the amount a user can borrow and the amount of leverage he can use. As time goes on, a given user pays interest on the amount he has borrowed - The amount of interest he pays is dependent on the interest rate and the duration for which his position has been opened. ### Liquidation When a user opens a position he converts his borrowed amount plus his collateral amount into asset tokens. In other words he does this: ``` swap(borrowed amount + collateral amount) = asset tokens ``` If the amount of asset tokens he has is worth less than the collateral amount he has borrowed then he can be liquidated: ``` swap(asset tokens) < collateral amount = can be liquidated ``` If this is the case then a seperate user can attempt to liquidate the position. In the case of a liquidation, the following swap function is carried out: ``` swap(asset tokens) + maintenance margin = liquidation amount ``` This liquidation amount is then compared to the borrowed amount - Any excess is used to reward various participants. ``` Max(borrowed amount - liquidation amount, 0) = total reward ``` The total reward is distributed in the following ways: * `Liquidator reward: 3%` * `Funding Pool reward: 50%` * `IFEX token reward: 47% (reward is swapped to IFEX prior)`