MUFEX
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English
  • What is MUFEX?
    • πŸ“–Overview
    • 🏦MUFEX's Decentralized and Trustless Approach
    • πŸ“ˆMUFEX Perpetual Trading System
    • πŸ’ŽMUFEX Liquidity Pool
    • πŸ—ΊοΈRoadmap
  • Start Using MUFEX
    • πŸ‘©β€πŸš€Onboarding
    • πŸ’΅Depositing
      • Deposit FAQ
        • What should I do if the deposited currency has not been received?
        • How to solve recharge error?
        • Funds Recovery Guide
    • πŸ“ˆTrading
      • πŸ’ΉOpen/Close Positions
      • πŸ’²Trading Fees
      • πŸ–₯️Market , Limit & Conditional Order
      • πŸ›°οΈTake Profit & Stop Loss
      • 🏝️Isolated Margin/ Cross Margin
      • πŸ“Trading Rules
        • Risk Limit
        • Risk limit Parameters
        • Index Price
        • Mark Price
        • Liquidation Process
        • Margin Mechanism
        • Funding Fee
        • Insurance Fund
        • Auto-Deleveraging (ADL)
      • πŸ“‘Contract Specs
    • πŸ’ŽEarn
    • 🏧Withdrawal
      • Withdrawal FAQs
        • Why Hasn't My Withdrawal Been Credited?
    • πŸ’²Fee Rates
  • Technical Solution
    • πŸ—οΈTechnology Architecture
    • 🏦ZK-Rollup Asset Proof Design
    • πŸ›₯️Dunkirk Asset Recovery
  • What makes MUFEX secure?
    • πŸ“‘MUFEX Security White Paper
      • Security Team and Its Functions
      • Client Security
      • Endpoint Security
      • Network Security
      • Server Security
      • Application Security
      • Smart Contract Security
      • Data Security
      • Physical Infrastructure Security
    • πŸ“”Smart Contracts
    • πŸ”Audit
    • 🐞Bug Bounty
  • Testnet
    • πŸ§‘β€πŸ³Testnet Walkthrough
      • 1️⃣Get started with MUFEX
      • 2️⃣Get Test Tokens
      • 3️⃣Account & Assets
      • 4️⃣Depositing & Withdrawing
      • 5️⃣Trading
      • 6️⃣Earn via MLP
      • 7️⃣Feedback
      • 8️⃣Common Questions
  • Support
    • πŸ””MUFEX Announcement
      • Notice on Upgrade and Adjustment of the Affiliate System
      • MUFEX Upcoming Delisting of Trading Pairs Reminder
      • MUFEX Notice: Delisting of Certain Trading Pairs
      • MUFEX Coin Pair Adjustment Notice
      • MUFEX is Upgrading MLP and Copy Trading Features
      • MUFEX to Discontinue MLP and Copy Trading Services
      • MUFEX Announcement: Notice on Delisting COMPUSDT and GMTUSDT Contracts
      • MUFEX Announcement: System Upgrade and Trading Suspension Notice Postponement
      • System Upgrade and Trading Suspension Notice
      • MUFEX Cryptocurrency Exchange Service Area Statement:
      • Adjusting Parameters for Certain Contract Trading Pairs (2024/2/7)
    • ❓FAQ
      • How to Delete My MUFEX Account?
      • Why is my IP banned from service
      • Can I use MUFEX service if I don't have an web3 wallet
      • Why do I need to deposit first?
      • Why didn't I see the asset balance change after I deposit?
      • Why did I receive an email from Unipass?
      • What is Effective Leverage?
    • πŸ‘©β€πŸ”¬Help Center
    • πŸ“Release Log
    • πŸ‘¨β€πŸ«MUFEX Affiliate Program
    • πŸ’»Social Media & Communities
    • πŸ’ΌBusiness Cooperation
    • πŸ“±Install MUFEX through the App Store
      • How to get an Apple ID in the US
      • How to use Taobao Purchase a non-mainland Apple ID
      • How to install MUFEX iOS TestFlight
    • πŸ™‹β€β™‚οΈEarly Ambassador Program
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  1. Start Using MUFEX
  2. Trading
  3. Trading Rules

Liquidation Process

MUFEX uses mark price to avoid liquidation caused by low liquidity or market manipulation.

Under isolated margin, when position margin decreases to the maintenance margin level, the position is liquidated. Please take note that if a trader holds long and short positions simultaneously under isolated mode, it may happen that both positions get liquidated under extreme market movement since long and short positions are independent.

Under cross margin mode, when available balance decreases to 0 and position margin decreases to maintenance margin level, the position is liquidated. Please take note that when holding hedged positions of both long and short under cross margin mode, only the net long or net short position may be liquidated. A fully hedged position will not be liquidated.

Larger positions may raise the margin requirement.

When liquidation happens, MUFEX uses partial liquidation to reduce the required maintenance margin to avoid full liquidation. The liquidation process is as follows.

Traders under the lowest margin tier

  1. Cancel all active orders of this contract;

  2. If it still doesn’t meet the maintenance margin requirement, that position will be closed at the bankruptcy price by the Liquidation Engine.

Traders under second or higher margin tier

The liquidation engine will try to lower the margin tier to lower the margin requirement:

  1. Cancel outstanding orders for the contract while retaining the existing position, releasing a portion of the frozen margin to determine if the maintenance margin requirement is met.

  2. Gradually reduce the position and downgrade the tier by closing out positions in higher tiers one by one, releasing the margin frozen in higher tiers down to the minimum tier, thus avoiding further liquidation.

  3. If the position is still in a liquidation state, the liquidation engine takes over the position at the bankruptcy price.

When liquidation is executed at the bankruptcy price, the following scenarios may occur:

  • If the position can be executed in the market at a price better than the bankruptcy 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 deficit will be covered by the insurance fund. Finally, if the insurance fund is insufficient to cover the deficit, the liquidation position will be taken over by the automatic deleveraging system and go through the automatic deleveraging process.

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Last updated 1 year ago

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