Liquidations

Liquidators play a crucial role in our trading engine.

Maintenance Collateral

Maintenance collateral is the minimum collateral required to keep the position open and not liquidated. The position will be liquidated if its collateral falls below the required maintenance collateral. Collateral health ratio is used to determine the maintenance collateral. For any given position, the collateral health ratio is determined as:

• Collateral Health Ratio = [Net Collateral + gross PnL - accumulated borrow fee - closing fee + funding received or paid ]/ Net Collateral, where

  • Net Collateral= Original Collateral - Opening Fee

• Liquidations happen when collateral health ratio falls below 15%

We plan to open-source our liquidation bot, so that anyone in the community can run liquidators, and ensure that our trading engine functions smoothly. All liquidators (regardless of whether they're run by our team or external bots) get to keep 5% of the liquidated collateral as a liquidation reward.