# Margin Call

A Margin Call is an early warning mechanism triggered when a [Margin Account's](https://docs.arkis.xyz/home/concepts/margin-account) [Risk Factor](https://docs.arkis.xyz/home/concepts/risk-factor) approaches the Liquidation Threshold, signaling that the portfolio is under stress but not yet unsafe enough to be liquidated.

It provides the [Asset Manager](https://docs.arkis.xyz/home/concepts/asset-manager) (Borrower) with an opportunity to restore their account health before [Liquidation](https://docs.arkis.xyz/home/concepts/liquidation) occurs.

### **How it Works**

1. Risk Breach Detection
   * The Margin Engine detects that the Risk Factor is nearing critical levels.
   * The Margin Call status is flagged internally in the system.
2. Notification to Asset Manager
   * Asset Managers are notified via:
     * Arkis Web Portal
     * Email
     * Real-time alerts via Arkis API (for connected trading systems)
3. Grace Period for Action
   * The Asset Manager is expected to either:
     * Top up collateral with whitelisted tokens, or
     * Reduce borrowings (i.e., repay a portion of the debt), or
     * Reduce risk by closing positions that are volatile or underperforming.
4. Monitoring
   * The Margin Engine continuously monitors whether the account’s Risk Factor improves.
   * If no action is taken and Risk Factor drops below the Liquidation Threshold, liquidation is initiated automatically.

### **Example**

* Borrowed: $10,000 USDC
* Stress-Tested Value of Portfolio: $11,200
* Risk Factor = 1.12

If:

* Margin Call Threshold = 1.15
* Liquidation Threshold = 1.00

Then:

* Margin Call is triggered.
* Asset Manager has time to adjust before the account becomes eligible for liquidation.