Maintained Margin and Liquidation Price

In order to maintain an open position, it is necessary for the user to ensure that their balance, consisting of the collateral and profit/loss from the trade, remains at or above 15% of the present notional value. Should the user's balance fall below 15% of the trading size, the position will be forcibly closed or liquidated. The liquidation price refers to the value at which this occurs. The liquidation price for long and short positions can be determined mathematically using specific formulas.

$$\begin{align*} &\text{liquidation price}_\text{long} = \frac{\text{contract size}\times\text{entry price}+\text{interest}-\text{collateral}-\text{over collateral}}{(1-\%\, \text{maintenance margin}-\%\, \text{trading fee})\times \text{contract size}}, \\ &\text{liquidation price}_\text{short} = \frac{\text{contract size}\times\text{entry price}+\text{collateral}+\text{over collateral}}{(1+\%\, \text{maintenance margin}+\%\, \text{trading fee} )\times \text{contract size}+\text{interest}}, \end{align*}$$

• The entry price is the price of the underlying asset at which the user takes the trade

• % collateral is the ratio of the collateral value and the total trading size

• 15% is the smallest ratio of the user’s balance and the mark-to-market value of the trade.

If a liquidation occurs, the collateral will be sold at the current market price to cover the loss, and the resulting capital will be utilized to reimburse the loss. The remaining amount, after deducting the liquidation fee, will be refunded to the user. Details on when the user will face losses can be found in Tables 1 and 2.