Explain MPC_HOLD_MAX_XY

I was wondering what this parameter does (along with MPC_HOLD_MAX_Z).
The docs says: Maximum horizontal velocity for which position hold is enabled (use 0 to disable check).

What I understand is that the position control loop is disabled if the velocity is over a certain value defined by MPC_HOLD_MAX_XY. Is that correct? Or what happens when that velocity is higher than that parameter?

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