BVOX Futures: Liquidation

1.About Liquidation

BVOX uses Mark Price to prevent forced liquidation due to insufficient liquidity or market manipulation. Your liquidation price and unrealized PNL will be calculated using the Mark Price.

• Liquidation in Isolated Margin Mode：Position Margin + Unrealized P&L ≤ Maintenance Margin，When the margin rate = 100%, liquidation will be triggered.
• Liquidation in Cross Margin Mode：Equity in cross margin account (excluding margin and unrealized PNL in isolated margin mode, and all order margin) ≤ Maintenance Margin，When the margin rate = 100%, liquidation will be triggered.

2.Liquidation Process

In the event that liquidation is triggered, the system will limit the position according to the risk set by the user. The system will implement a ladder forced liquidation method to avoid all positions being liquidated, thereby mitigating the user's risk.

• Canceling an order：In cross margin mode, all current orders will be canceled. In isolated margin mode, if automatic margin call is enabled, all current Futures orders will be canceled. If the margin rate is still greater than 100% after the cancellation, the system will proceed to the next step.
• Long/short self-dealing：Self-deal forced position reduction of cross margin positions in hedged mode (only for cross margin mode). If the margin rate is still greater than or equal to 100%, the system will continue to the next step.
• Partial liquidation：If the user's position is at the lowest risk tier, the system will proceed to the next step directly. If tier is greater than the 1st tier, the tier needs to be lowered first, i.e., part of the positions at the current tier will be taken over by the forced liquidation mechanism and liquidated at the bankruptcy price so as to reduce the risk limit tier. The maintenance margin rate is then calculated using the maintenance margin after the reduction to see if it is greater than or equal to 100%. If the conditions for liquidation are still met, the positions will be reduced again until it reaches the lowest tier.
• Forced liquidation：If the position is at the lowest tier but the margin rate is greater than or equal to 100%, the remaining position will be taken over by the forced liquidation mechanism and liquidated at the bankruptcy price. (The takeover process does not go through the aggregation system so the bankruptcy price will not be displayed on the market transaction record and K-line)

Process after positions are taken over by the forced liquidation mechanism:

• When a user’s position is taken over by the forced liquidation mechanism at the bankruptcy price, if the position can be executed in the market at a better price, the remaining margin will be added to the insurance fund.
• If the position cannot be executed at a price better than the bankruptcy price, the loss will be covered by the insurance fund. Eventually, if the insurance fund is not sufficient to cover the loss of the liquidated position, the position will be taken over by the auto-deleveraging system.

3.Calculation of Liquidation Price

• Liquidation Price (isolated margin mode, users can manually add margin)

Liquidation Price = (Position Margin – Position Direction * Average opening price * Contract Multiplier * Position cont size) / (Maintenance Margin Rate * Position cont size * Contract Multiplier - Position Direction * Position cont size * Contract Multiplier)

 

*In isolated margin mode, users can manually increase the margin of the position to widen the gap it has from the opening price. This will give them a better liquidation price. Hence, users can manually increase the margin to lower the risk of the position when the margin ratio is high.

• Liquidation Price (cross margin mode) 

Forced Liquidation Price (cross margin mode)= (Wallet Balance Cross - TMM1 +UPNL1 - Long Position Cont Size * Contract Multiplier* Long Average opening price + Short Position Cont Size * Contract Multiplier* Short Average opening price ) / ( Long Position Cont Size * Contract Multiplier *Long MMR+ Short Position Cont Size * Contract Multiplier * Short MMR- Long Position Cont Size * Contract Multiplier + Short Position Cont Size * Contract Multiplier)

 

TMM1: Maintenance Margin of all other contracts, excluding Contract 1 (where contract 1 is the specific symbol for which the liquidation price is being calculated).

UPNL1: Unrealized PNL of all other contracts, excluding Contract 1

 

 

*Different from isolated margin mode, the liquidation price in cross margin mode may change from time to time as the margin might be affected by positions of other trading pairs. In cross margin mode, the initial margin of every position is independent, but the margin is shared. The unrealized PNL of each position may affect cross margin account equity. When there are multiple cross margin positions in both long and short positions under the same futures, the liquidation price for the two positions will be the same.

 

BVOX Team

Risk warning: The cryptocurrency market has high risks, please understand the risks and invest in products you are familiar with. Please carefully consider your investment experience, financial situation, investment objectives, risk tolerance and consult professional independent investment experts to make a decision before investing. The information presented on this page is for informational purposes only and should not be construed as any investment advice. Past earnings performance is not indicative of future earnings. You should be aware that the market value and returns of investment products fluctuate and you may lose the amount you invest. You are solely responsible for your investment decisions. BVOX is not responsible for any possible investment losses.