Liquidations
Accounts whose margin ratio falls below the maintenance margin requirement of 3.5% may have their positions automatically closed by the liquidation engine. Positions are closed using the liquidation process described below. Profits or losses from liquidations are taken on by the insurance fund.
To prevent your position from being liquidated, consider adding more collateral to the position from the Overview page.
When an account falls below the maintenance margin threshold, the position is at risk of being liquidated. You can still add more collateral to prevent the position from being liquidated. If the position is liquidated, you will lose all your collateral in the position.
When a trader's position is liquidated by the liquidation engine, the system's auto-liquidation engine takes over the trader's position at the bankruptcy price and unwinds the position against the market AMM. In cases when markets move sharply against the position beyond the bankruptcy price, losses will be covered by the insurance fund. In the worst-case scenario, if the insurance fund is insufficient to cover claims, all positions will be auto-closed and flattened against the AMM. We view this as an extremely unlikely event based on 800+ market simulations.
Last modified 4mo ago
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