📕Liquidations
Liquidation is the forced closure of a position when it no longer has enough collateral to meet margin requirements. It protects the protocol and liquidity providers from positions that could become insolvent.
When Does Liquidation Happen?
A position becomes liquidatable when remaining collateral falls below the minimum required to support the position size.
Remaining collateral is calculated as:
Where fees include any accrued carry.
A position is liquidated remaining collateral falls below the minimum collateral requirement for the position size
The minimum collateral requirement is determined by the market's minCollateralFactor. For example, with a 1% factor, a $10,000 position requires at least $100 in remaining collateral.
What Happens During Liquidation?
When a position is liquidated:
The entire position is closed — there are no partial liquidations
All outstanding fees are deducted (closing fee, borrowing, funding, and liquidation fee)
Any remaining collateral is returned to you
If your remaining collateral doesn't cover the fees, the position is considered insolvent. In this case, you receive nothing and the protocol absorbs the shortfall.
Liquidation Fees and Payouts
A liquidation fee is charged as a percentage of your position size when liquidated. After the liquidation fee and any outstanding costs (borrowing, funding, closing fees) are deducted:
Collateral covers all fees
Remaining collateral returned to your account
Collateral doesn't cover fees
Nothing — position was insolvent
Example: A $10,000 position would incur a $30 liquidation fee. If you had $50 in remaining collateral before the fee, you'd receive $20 back.
Avoiding Liquidation
To reduce liquidation risk:
Use lower leverage - more collateral relative to position size gives you a larger buffer
Monitor your positions - especially during volatile market conditions
Add collateral - increase your margin before reaching the liquidation threshold
Set stop-losses - close positions automatically before liquidation
Current Liqudiation Parameters
USDT / ARS
1%
0.3%
USDT / NGN
1%
0.3%
(Additional markets will be added as they go live)
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