Tiered Liquidation
Last updated
Last updated
Because the contract uses leverage, the value of the margin may be less than the value of the position. When the margin is not enough to maintain the position, the system will perform a forced selling operation on the position, which is liquidation.
Liquidation conditions:
Margin Rate <= (Maintenance Margin Rate + Fee Rate)
At the same time, the mark price will also reach the liquidation price, because the margin rate is calculated based on the mark price.
When it is detected that the user will be liquidated, the system will cancel all the user's opening orders to release the margin and prevent liquidation.
If there are two long and short contracts in one contract, when it is detected that the user will be liquidated, the long and short positions will be merged, and only the delta value will be kept, which can reduce the occupation of margin and prevent liquidation.
Calculate the different positions to the next tier, and liquidate this part of the difference.
All positions will be liquidated by force if it is already the lowest tier.
During the forced liquidation, the position and margin are frozen, and users cannot operate.
Forced liquidation of all positions at once is not only unfriendly to users but also has an impact on market liquidity, resulting in large losses after liquidation.
By adopting tiered liquidation, multiple tiers are set up, and each tier corresponds to a different maintenance margin rate. When the system judges that the margin is not enough for the maintenance margin of the tier where the current position is located, it will perform the forced liquidation, reducing the number of positions to the next tier, and only liquidating the difference between the two tiers.
For example:
(0, 10000]
0.04%
(10000, 50000]
0.05%
(50000, 100000]
0.1%
(100000, 300000]
0.5%
(300000, x]
x
Position value: 80,000 USDT
Margin rate: 0.08%
Determine which tier you are in: third tier (50000, 100000] 0.1%
Judging whether to liquidate: 0.08% < 0.1% Yes
Forced liquidation position value: 30000 USDT = holding position 80000 - the next highest 50000
Takeover Margin: Liquidation Value * Maintenance Margin Rate = 30000 * 0.1% = 30 USDT
The maintenance margin rate is the minimum ratio of the system to allow the position margin relative to the position value. If it is less than this ratio, it is necessary to start liquidation.