KuCoin Spot Margin Trading Will Launch the Tiered Collateral Haircuts Mechanism
Dear KuCoin Users,
To further enhance risk control and trading experience, KuCoin Spot Margin Trading will launch the Tiered Collateral Haircuts mechanism on September 15, 2025.
Feature Update:
1. Tiered Collateral Haircuts
To better manage risks in Margin borrowing, KuCoin is introducing a Tiered Collateral Haircuts mechanism. Under this mechanism, when assets are used as collateral in Spot Margin trading, their value will be calculated based on tiered collateral haircuts according to the notional value of the asset. This mechanism only affects the user’s maximum borrowable amount and transfer-out amounts, and does not impact the calculation of the liquidation threshold or forced liquidation ratio.
Example:
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Eg. Using Token ABC as Collateral
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Previous
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New
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Token Quantity
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1,000,000
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1,000,000
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Mark Price
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1 ABC = 1 USDT
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1 ABC = 1 USDT
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Collateral Coefficient
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1
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1 (Not involved in the calculation of Maximum Borrowing)
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Leverage
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5x
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5x
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Collateral Value
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1,000,000 * 1 USDT*1 = 1,000,000 USDT
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The user holds 1,000,000 ABC tokens, which are subject to the Tiered Collateral Haircuts for Token ABC. The token's market value is converted to USDT based on the following tiered structure:
Collateral Value under the Tiered Collateral Haircuts (used for borrowing calculation):
(10,000 - 0) × 100% +
(50,000 - 10,000) × 90% +
(100,000 - 50,000) × 80% +
(500,000 - 100,000) × 60% +
(1,000,000 - 500,000) × 0%
= 10,000 + 36,000 + 40,000 + 240,000 + 0
= 326,000 USDT
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Maximum Borrowing
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Maximum Borrowable Amount = Collateral Value × (Leverage - 1)
= 1,000,000 × (5 - 1) = 4,000,000 USDT
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Maximum Borrowable Amount = Collateral Value × (Leverage - 1)
= 326,000 × (5 - 1) = 1,304,000 USDT
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LTV-Based Collateral Calculation
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Collateral Value = Token Quantity * Mark Price * Collateral Coefficient
= 1,000,000 * 1 * 1 = 1,000,000 USDT
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Collateral Value = Token Quantity * Mark Price * Collateral Coefficient
= 1,000,000 * 1 * 1 = 1,000,000 USDT
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Transfer Out Assets Calculation
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Transfer Out Amount = Total Assets - (Liabilities / Transfer-out Debt Ratio [60%])
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The current maximum transfer-out debt ratio is 60%, calculated as:
Transfer-out Debt Ratio (60%) = Liabilities / Collateral Value (based on the tiered collateral mechanism)
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Refer to token haircuts: https://www.kucoin.com/margin-data/collateral-ratio
App Version Requirement: Available for users on App version 4.0.0 and above. Please update your KuCoin app to access the new features.
2. Scope of Impact
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The Tiered Collateral Haircuts will apply to all Cross and Isolated Margin trading pairs when borrowing occurs.
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The new mechanism affects borrowing and asset transfer limits. Please refer to the example above.
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Note: The new mechanism only affects maximum borrowable amount and maximum transfer amount. It does not impact the forced liquidation threshold or LTV liquidation calculations.
Risk Warning: Margin trading refers to the practice of borrowing funds with a relatively lower amount of capital to trade financial assets and obtain bigger profits. However, due to market risks, price fluctuations, and other factors, you are strongly recommended to be prudent about your investment actions, adopt an appropriate leverage level for Margin trading, and properly stop your losses in a timely manner. KuCoin assumes no responsibility for any losses arising from the trade.
We apologize for any inconvenience caused and appreciate your patience.
Thanks for your understanding and support!
The KuCoin Team
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