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Liquidation Mechanism

What Is Liquidation ?

Liquidation in the context of leverage trading is a crucial mechanism that occurs when a trader's position falls below a specified margin requirement. Essentially, if the value of the assets held in a leveraged position drops to a point where it no longer covers the required margin, the position is automatically closed, or "liquidated," by the platform. This process is designed to minimize potential losses and protect both the trader and the platform from incurring a negative balance. Liquidation is a key risk management tool in leverage trading, ensuring that losses do not exceed the trader's initial

How To Calculate Liquidation

Loss and Profit is multiplied by selected leverage option
Current ETH Value <= Position ethAmount -(Position ethAmount / leverageMultiplier)
For Example , If a 2x position drops more than 50% effective 2x loss is 100% resulting in liquidation

Manual Liquidation

In our trading platform, while smart contracts offer a high level of security and automation, they currently do not have the capability to track and liquidate trades in real-time. This limitation is addressed by our platform's manual oversight mechanism. When a trade approaches the liquidation threshold due to market movements, a transaction is initiated and carefully monitored by our platform's management team. This process involves manually executing a liquidation to ensure that it is handled accurately and efficiently.
An efficient Automatic Liquidation Mechanism is underway in version2.0 of Leverage Contracts, read more about Future Developments
It is to be noted that users can not execute new trades before previous ones are closed or liquidated in the same leverage pool, If a user's trade has been ignored and not liquidated , they can demand liquidation by reaching us from the support bot
Last modified 1mo ago