⛔ Liquidation

Guide to Liquidation process on ebi.xyz

Ebi.xyz runs on isolated margin, thus, the liquidation process begins when the trader’s collateral balance (CB) drops below the maintenance margin (MM) level.

The maintenance margin (MM) refers to the minimum amount of collateral the trader needs to have in their account balance to maintain their open positions.

⛔ Step-by-step Liquidation on Isolated Margin

Step 1: Initiate Liquidation on Trading Pair

Once CB drops below MM, a trader’s position will kickstart the liquidation engine.

Step 2: Locking of Trading Pair 🔒

The liquidation engine will limit the trader from trading the pair involved in the liquidation. The trader will be unable to add collateral and place new orders. Furthermore, all open orders on the liquidating pair will be forcefully cancelled.

Note: Traders can continue trading and adding collateral for other pairs.

Step 3: Cancel All Orders on liquidating trading pair❌

If the trader has insufficient collateral, even after cancelling open orders, their position will be sold at the liquidation price through the order book.

In the case where the engine can’t liquidate the position with the order book, it will perform trade(s) at bankruptcy price until the trader’s collateral is above the maintenance requirement.

Note: Liquidations will incur a 4% liquidation fee.

Step 4: Check position and end liquidation process 🔍

If the initial sale doesn’t cover the maintenance margin, the position may be sold again at the bankruptcy price, potentially multiple times, to manage the shortfall.

Step 6: Liquidated Trading Pair Unlock or Further Actions via ADL 🔄

Once the liquidation process successfully covers the maintenance margin, your account will be unlocked. However, if the liquidation process is not successful, further actions will be taken below.

The system checks if the insurance fund is available to cover any remaining deficit. -> If available, the fund is used, and the account is unlocked -> If not, your position might be further reduced by an Auto-Deleveraging (ADL) system.

Step 7. End of Liquidation Process 🔚

Once the trader’s collateral is above the maintenance requirement, his/her account will be unlocked.