💧Liquidation
Overview
The maintenance margin rate is an indicator of the risk associated with the collateral assets of a position. When the margin rate approaches the minimum maintenance margin, your position will be forcibly taken over by the system. We use the mark price to calculate the margin rate to avoid forced liquidations caused by insufficient liquidity or market manipulation. The maintenance margin rate is between 0.5%* (for 125x* max leverage) and 50%* (for 1x* max leverage) depending on the asset and risk limits by tiers.
*may be changed in the future
About Stepwise Liquidation
To prevent significant market impact and large liquidation losses when large positions are liquidated, we employ a stepwise liquidation mechanism. Each step corresponds to a different maintenance margin rate. When the system determines that the margin is insufficient for the maintenance margin of the current position tier, it will perform a liquidation operation to reduce the position size to the corresponding level. When a position reaches the liquidation condition, the system automatically executes the following measures to release the available margin and prevent forced liquidation:
The system will cancel all current orders for this contract.
The long and Short positions of the same contract will be matched and closed.
If, after executing the above steps, the user's margin rate remains less than the current tier's maintenance margin rate, forced liquidation will occur.
If the margin rate is still less than the current position's maintenance margin rate, the system will forcefully reduce the position to the net position limit of the next tier, ensuring that the margin rate exceeds 0%.
If the system calculates that the forced liquidation should be adjusted to the first tier but the margin rate still does not exceed 0%, then the entire position will be forcibly liquidated.
During forced liquidation, users cannot perform any operations related to this contract. Example:
For BTC, when a user has a large position and is at tier 3 or above (e.g., holding 15,000 contracts) if the liquidation engine detects that the user's current margin rate is less than or equal to the required maintenance margin rate plus the liquidation fee rate, it will not directly liquidate all of the user's positions.
Instead, it will perform a forced partial liquidation first. The system calculates the number of contracts needed to be reduced by two tiers:
Contracts to Reduce =
Current Contracts − Max Contracts of Tier 1 = 15,000 − 2,000 = 13,000
If the user is in isolated margin mode, the system will place a forced partial liquidation order for the required number of contracts at a price slightly better than the latest transaction price. During this forced partial liquidation, the user's position in that contract direction will be frozen, and they will be unable to perform any contract-related operations.
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