Liquidation

All open positions are subject to liquidation when the position's equity value (collateral + PnL - fees) drops below 10% to 20% of the initial collateral size, depending on the leverage. This threshold is reflected in the liquidation price, which represents the market price at which your position would reach that liquidation condition.

Liquidation Price

Liquidation price of a position is calculated as:

$\begin{aligned} \text{LiqPrice} &= \text{EntryPrice} \cdot \left(1 - \right.\\ &\left.\frac{ \text{CollateralSize} \cdot (\text{LiquidationThreshold} + \text{LiquidationBuffer}) - \text{ExitFee} - \text{FundingFee} }{\text{PositionSize}}\right) \end{aligned}$

where

• LiquidationThreshold is currently fixed at 10% for all pairs.

• LiquidationBuffer is the extra buffer that ranges from 0% to 10% based on the leverage of position.

• ExitFee is the amount of maker or taker fee that is proportional to the position size.

• FundingFees is the amount of cumulative funding fee of the position. Note that the liquidation price can be changed over time as funding fee accumulates.

Liquidation Buffer

$\text{Liquidation Buffer}=\frac{\text{Position Leverage}-\text{Min Leverage}}{\text{Max Leverage}-\text{Min Leverage}}\times 10\%$

Min Leverage and Max Leverage depend on the trading pair (see Trading Pairs). For example, for crypto trading pairs, currently Min Leverage is 3 and Max Leverage is 150.

If liquidation occurs, a liquidation fee is charged to MKLP, based on the liquidation buffer:

$\text{Liquidation Fee}=\text{Liquidation Buffer}\times\text{Original Collateral}$