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Can dynamic margin calls mitigate leverage over-extension? Dynamic margin calls are a critical risk-mitigation tool. Instead of a fixed liquidation threshold, a system could use a sliding scale that becomes more conservative as overall systemic leverage increases. For example, if the total leverage ratio across the restaking ecosystem rises above a certain threshold, smart contracts could automatically and preemptively lower the Loan-to-Value (LTV) ratio for all positions, forcing a gradual deleveraging. This acts as a "circuit breaker," mechanically reducing risk in the system before a crash occurs. While this would trim potential returns during a bull market, it prevents the catastrophic, synchronized liquidations that occur when everyone hits a fixed liquidation line at the same time during a downturn.

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