Documentation

Liquidation

What it is, exactly when it happens, and how to keep it from happening.

A position is liquidated when its health falls to the market's maintenance margin. Health is collateral plus unrealised profit, less borrow and funding, so a position can be liquidated on a day the price barely moved. Less leverage, a stop loss, and adding collateral are the three ways to push it away.

The pool cannot let a position run past the collateral standing behind it, because past that point the loss is the pool's rather than yours. That is the whole of the rule:

liquidated when:  health <= size x maintenance margin

The liquidation price

The mark price at which that inequality becomes true. The ticket shows it before you open, and the position row keeps showing it afterwards. The ticket's figure counts no fees, because nothing is charged at open. The row's figure counts the borrow and funding accrued so far.

Three ways to not be liquidated

1. Less leverage. The single biggest lever. Halving leverage roughly doubles the distance to liquidation.
2. A stop loss. A stop closes the position at your level, before the maintenance margin decides for you.
3. Increase at lower leverage. Adding to a position with more collateral per unit of size than it already has pulls the blended liquidation price away from the mark.

What you are left with

Liquidation closes the position at the mark and settles it against the pool. What remains of the collateral after the loss, the accrued fees and the liquidation reward that pays the keeper comes back to you, which is usually little and is not nothing. The event shows in your history like any other close, labelled Liquidated.