TL;DR
- RiskMatrix Three-Step Waterfall Approach: BSX uses Liquidation with partial liquidations, then insurance fund for negative balances, and finally auto-deleveraging for exchange solvency as the principle for RiskMatrix.
- Robust Risk Management: BSX’s proprietary algorithm minimizes order book impact, while scam wick protections guard against price manipulation.
- User-Centric Benefits: BSX believes in improving holistic efficiency while minimizing losses for traders by intelligently managing volatility and liquidity risk.
Trading on exchanges comes with its fair share of risk, particularly due to the high volatility inherent in cryptos. To address this, BSX has developed a robust risk management system: the BSX RiskMatrix. This engine is an approach and commitment to maintain solvency and fairness, ensuring that the platform remains a secure environment for traders.
How RiskMatrix Works: A Three-Step Waterfall Approach
RiskMatrix has a meticulous three-step waterfall approach to risk management, designed to keep the exchange solvent during market volatility.
Liquidation: When a trader’s account equity falls below the portfolio maintenance margin, BSX’s in-house liquidation engine activates. It effectively liquidates positions, reducing the impact on the order book. Additionally, BSX performs partial liquidations to minimize the likelihood of full liquidation and help traders maintain their positions. rt,
Insurance Fund If a trader’s account equity does turn negative, the insurance fund steps in as the first remedy to reset the account balance to zero. This fund is initially seeded by the BSX team and subsequently boosted by liquidation penalties.
Auto-Deleveraging (ADL) As a final safeguard, the ADL process is invoked if the insurance fund cannot cover bankrupt accounts. It prioritizes the deleveraging of the most profitable or highly leveraged traders, reallocating funds to cover negative equity accounts and ensuring the exchange’s solvency.
Distinctive Features Setting BSX Apart
What truly distinguishes BSX from its competitors is the comprehensive and proactive approach to risk management:
- Proprietary Algorithm: BSX’s in-house algorithm minimizes the impact on the order book during liquidations.
- Partial Liquidations: We understand nobody likes to lose money. RiskMatrix performs partial liquidations to help traders avoid complete liquidation and maintain their positions.
- Cross Margin: Native cross margin system allows you to use your entire portfolio as collateral, maximizing gains and minimizing liquidation risks. Profits from one position can support underperforming ones, enhancing your overall trading strategy.
- Scam Wick Protections: Safeguarding against price manipulation by not relying solely on its order book prices. We use an “index price” to prevent large, sudden price swings — known as scam wicks — from liquidating positions or giving bad fills. The goal is to protect traders from erroneous fills and faulty liquidations.
Here’s the table comparing BSX and competitors in terms of liquidation process:
What’s in it for BSX’s users?
BSX’s cutting-edge RiskMatrix revolutionizes the trading experience, offering unrivaled security and efficiency. By intelligently managing volatility and liquidity risks, the RiskMatrix minimizes potential losses while optimizing transaction speed. This engine helps empower traders to focus on maximizing returns without the constant worry of market fluctuations.
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🌐 Website: www.bsx.exchange
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