The liquidation process for isolated and cross margin is as follows.
Isolated Margin Liquidation Process
- When the Mark Price reaches the liquidation price, the position is taken over by the liquidation engine.
- The liquidation engine takes the position and liquidates the position to the bankruptcy price.
- Reduce risk limit and carry out liquidation process step by step.
Note) The liquidation engine tries to prevent contract losses by closing the position at the bankruptcy price. However, in volatile or non-liquid markets, the position may be closed at a price worse than the bankruptcy price. In the event of such contract loss, the insurance fund will primarily act to prevent the loss, and if the insurance fund has insufficient funds, the position will be handled through auto deleveraging.
Cross Margin Liquidation Process
Cross margin secures margin to delay liquidation in the following ranks. The position is liquidated when all four steps are progressed.
- #1 Available Balance
- #2 Reduce Risk Limit Level
- #3 Cancel all Active Orders in the same direction
- #4 Cancel all Active Orders in other directions