BitVenus 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.
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 (cross margin mode)
BitVenus official website: https://www.bitvenus.me
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