Liquidation is triggered when the Mark Price hits the Liquidation Price
Liquidation Price (Isolated Margin)
Initial Margin Rate (IMR) = 100 / Leverage (%)
Maintenance Margin Rate (MMR) is based on Tiered Margin
For Long (Buy)
Example
Trader place a long entry of 1 BTC at 100,000,000 VNDC with 50x leverage. Assuming no extra margin added.
IMR = 100 / 50 (%) = 2%
MMR = 0.1%
Liquidation Price = 100000000 * (100% - 2% + 0.1%) = 98,100,000 VNDC
For Short (Sell)
Example
Trader place a short entry of 1 BTC at 100,000,000 VNDC with 40x leverage. Assuming no extra margin added.
IMR = 100 / 40 (%) = 2.5%
MMR = 0.1%
Liquidation Price = 100000000 * (100% + 2.5% - 0.1%) = 102,400,000 VNDC
Liquidation Price (Cross Margin)
Comparing to Isolated Margin mode, Liquidation Price under Cross Margin mode might keep changing as the available balance will be affected by the other trading pairs. Under cross margin mode, the initial margin used for each position is isolated from the account balance but the remaining balance is shared. The available balance will be affected by the unrealized P&L that occurred by all existing positions. Liquidation only happened when the available balance = 0 and each position do not have enough maintenance margin respectively.
For Long (Buy)
For Short (Sell)
Example 1: Only one unhedged position
Under Cross Margin, assuming trader A holding a 2BTC Long position at 100,000,000 VNDC with x100 leverage. The current available balance is 20,000,000 VNDC, current mark price = 105,000,000 VNDC, unrealized profit(Mark Price) is 10,000,000 VNDC
Initial Margin = 2 * 100000000 * [100 / 100 (%))] = 2,000,000 VNDC
Maintenance Margin = 2 * 100000000 * 0.1% = 200,000 VNDC
Available Balance = 20,000,000 VNDC
Total Sustainable Loss = Available Balance + Initial Margin - Maintenance Margin = 20,000,000 + 2,000,000 – 200,000 = 21,800,000 VNDC
With 21,800,000 VNDC, the position can sustain a price loss of 10,900,000 VNDC each 1 BTC (21,800,000 / 2 = 10,900,000)
Using the above logic, we can derive the liquidation price (Long) of this position would be: 105000000 – (20,000,000 + 2,000,000 – 200,000) / 2 = 94,100,000 VNDC
Example 2: One hedged position
Under Cross Margin, assuming trader B holding a 2BTC Long position with entry price at 100,000,000 VNDC with x100 leverage. The current available balance is 30,000,000 VNDC, current Mark Price is 95,000,000 VNDC, unrealized loss for the Long position (Mark Price) is 10,000,000 VNDC. At the same time, he is holding a Short position of 1BTC with same the leverage, entry price at 95,000,000 VNDC.
For the short position, it will never be getting liquidated as the Contract Size of Long position > Contract Size of Short position, whenever the price goes up, the unrealized profit for long position is always greater than the unrealized loss of the short position.
For the long position, we only need to consider the net exposure of the position abs(Long - Short ) = abs(2BTC - 1BTC) = 1BTC when calculating the liquidation price.
Available Balance = 30,000,000 VNDC
Initial Margin = 1 * 100000000 * [100 / 100 (%)] = 1,000,000 VNDC
Maintenance Margin = 1 * 100000000 * 0.1% = 100,000 VNDC
Liquidation Price = 95000000 – (30000000 + 1000000 – 100000) / 1 = 64,100,000 VNDC
Liquidation Clearance Fee
When a trader's position is liquidated, a percentage of the Liquidation Fee will be collected and paid into the Insurance Fund, thereby increasing the sustainability of the Insurance Fund. The liquidation fee is calculated based on the liquidated position size multiplied by the corresponding percentage for each trading pair. For more information on the aforementioned percentages, please refer to the Trading Rules page.
The liquidation fee is collected only based on the trader's margin used for the position. If the Trader's Margin is insufficient to settle the Liquidation Fee, the Insurance Fund will intervene to settle the Liquidation Fee, covering the shortfall for the Trader.
Traders should strictly control their position risks to avoid unintended liquidations.
Note
- If the trader chooses to trigger an SL order using Last Price, there is a possibility of the position being liquidated before the SL order is triggered due to the difference between the Last Price and the Mark Price.