Margin Tier
Hotcoin1.What Is The Margin Tier?
A Margin Tier Mechanism is introduced to avoid large amount of liquidation orders due to Full Liquidation impacting the market, in which the system will lower the corresponding tier of an adjustment factor to avoid the positions being liquidated at one time.
2. Margin Tier Rules
Partial Liquidation occurs when the Margin Ratio is lower than the required Maintenance Margin Ratio. if the orders are filled and the Margin Ratio of the remaining position reach the Maintenance Margin Ratio + Liquidation Fee Rate required by the relevant tier, then the remaining liquidation orders will be canceled, and the user’s control over the position is restored.If the liquidation orders are unfilled or the Margin Ratio of the remaining position does not reach the required Maintenance Margin Ratio + Liquidation Fee Rate, then the unfilled liquidation orders will be canceled. The liquidation procedure will start over again. The relevant position will be liquidated until it is at Tier 1.The partial liquidation process will be repeated until the latest Margin Ratio meets MMR requirement.
3.Forced Liquidation Process
When the forced liquidation is triggered by user, liquidation orders will be sent in a price by latest market price, force-closing the required Number of Swaps. During the time, the position will be frozen and not be controlled by the user.
About a minute later, if the orders are filled and the Margin Ratio of the remaining position reach the Maintenance Margin Ratio+ Forced-Liquidation Fee Rate required by the relevant tier, then the remaining liquidation orders will be canceled, and the user’s control over the position is restored. If the liquidation orders are unfilled or the Margin Ratio of the remaining position does not reach the required Maintenance Margin Ratio+ Forced-Liquidation Fee Rate, then the unfilled liquidation orders will be canceled. The liquidation procedure will start over again. This process will be repeated until the latest Margin Ratio meets MMR requirement.
During the partial liquidation process , the position will be frozen and not be controlled by the user;
Example : Long margin positions in BTC/USDT :If a user holds a large position at tier 2 or above (that is, the Positions(Cont) ≥500(Cont), like 600 ), and the liquidation engine detecting that the user's current margin rate is less than or equal to the required Maintenance Margin Rate + Forced-Liquidation Fee Rate, the liquidation system will not directly liquidate the whole position. Instead, a partial liquidation will be executed.
The system will calculate the position amount that needs liquidating to lower the position tier by 1 level.(which means, the Number of contracts to be closed = Number of contracts held – max Number of contracts acceptable for Tier 1 = 600 -500 = 100 contracts.