Margin System and Liquidation
Overview
In terms of derivatives, the margin refers to the amount required to buy and sell leveraged positions. For example, a margin of 10BTC is required to sell a contract valued 100BTC with 10x leverage.
The opening margin refers to the minimum amount needed to open a position; the maintenance margin refers to the minimum amount needed to keep the position from getting liquidated. If the margin of a position falls below the maintenance margin, the position will be liquidated.
Cross Margin
The cross margin, also known as “spread margin”, is a margin method that utilizes the full amounts of funds in the available balance to avoid liquidations. Any other profitable positions can help increase the margins on losing positions.
This margin method is useful for users who are hedging existing positions and also for arbitragers. It can ensure that the position will not be liquidated due to a position under high risk.
All positions in CoinBene’s position contracts are covered by the cross margin.
Liquidation
CoinBene perpetual contracts provide high multipliers of leverage. In order to keep a position from being liquidated, traders must hold margin at a certain proportion of the position value, which is also known as the maintenance margin. The minimum maintenance margin is 0.5% of the higher position. If your position does not meet the margin requirement, it will be liquidated and you will loss the margin. You can view the liquidation price of each position under “Holding Position” and adjust the liquidation price by transferring BTC to the contract account.
Minimizing Liquidations As Much As Possible
· CoinBene employs the fair mark price to avoid liquidations arising from the lack of liquidity or the market manipulation.
· If liquidation is triggered, CoinBene will cancel all unexecuted orders to release margin and keep positions.
Liquidation Process
When the margin of the contract position reaches 0.5% of the higher position, all positions under the contract will be liquidated.
The liquidation process is as follows:
1. CoinBene cancels all unexecuted orders to this contract.
2. If the maintenance margin requirement is not met at this time, the position is taken over by the liquidation engine at the bankruptcy price.
System Profit and Loss
· If CoinBene is able to liquidate at a price better than the bankruptcy price, the additional funds will be added to the insurance fund.
· If CoinBene is unable to liquidate at the bankruptcy price, CoinBene will employ the insurance fund and attempt to close it. If this still does not close the liquidated order, this will then lead to an Auto-Deleveraging event.
Examples of liquidation
· A trader buys a contract at the price of 100 USDT, the liquidation price is 99.5 USDT and the bankruptcy price is 99 USDT. If the liquidation occurs, this position will be taken over by the liquidation engine at price of 99 USDT and liquidated in the market. If the liquidated order is executed at 99.25 USDT, the insurance fund is 0.25 USDT.
· Another trader buys a contract at 100 USDT, the liquidation price is 99.5 USDT and the bankruptcy price is 99 USDT. In the event of a liquidation, the liquidation engine will execute the liquidated order at the lowest price not less than 98.75 USDT, that is: the bankruptcy price 99 USDT minus 0.25 USDT in the insurance fund. The liquidation engine will use the balance of the insurance fund to submit the liquidated order at a more radical price. If the liquidation order is executed at 98.75 USDT, then the insurance fund will become 0 USDT.
About CoinBene MoonBase
CoinBene MoonBase is a Blockchain Asset Priority Platform. It serves to filter blockchain assets by potentiality and performance and amplifies blockchain project reach in the cryptocurrency ecosystem. Efficiency is at the core of CoinBene MoonBase, with a significantly faster and more efficient listing process, it also provides comprehensive consulting services for projects to facilitate a more rapid development cycle.
For more check out — www.coinbene.com
