The disclosed embodiments provide a system that tracks and compensates for input signal noise at a receiver of a data communication channel. In particular embodiments, the receiver of the data communication link receives an input signal which comprises two signal levels. Next, for each of the two signal levels, the system generates an error signal by comparing the input signal value of the signal level with an expected signal value for the signal level. The system then updates a threshold signal value based on at least one of the two error signals associated with the two signal levels. Finally, the system compensates for input signal noise in the received input signal using the updated threshold signal value.