Liquidation

1. Account Margin Ratio

Margin ratio = (Position size * Average entry price * Maintenance margin rate) / Net position value

Net position value = Margin + Unrealized PnL + Funding fee - Taker fee

2. Maintenance Margin

Maintenance margin (MM) is the minimum amount of margin balance required to keep your positions open.

Formula:

Maintenance margin = Position size (crypto) * Average entry price * Maintenance margin rate

3. Liquidation Trigger

Forced liquidation is automatically triggered when your account margin ratio is lower than or equal to the maintenance margin ratio (i.e., when the margin ratio rises to 100% or above).

· The liquidation process is executed within a single block to avoid price slippage risks.

4. Post-Liquidation Handling

After liquidation, any remaining margin will be transferred into the Insurance Fund.

The insurance fund is used to offset platform losses when, under extreme market conditions, liquidation losses exceed the user's initial margin (i.e. "forced liquidation" or "negative equity").

5. Notes

· Forced Liquidation/Negative Equity

They refer to situations where extreme volatility causes position losses greater than your initial margin.

· Insurance Fund

Acting as a risk control mechanism, it is designed to cover users' negative equity, ensuring system stability and overall security.