[//]:content-type-MARKDOWN-DONOT-DELETE ##About Liquidation In futures trading, liquidation serves as a critical risk management mechanism designed to protect both users and the platform from potential losses caused by extreme market volatility. When a user's account margin falls below the level required to maintain current positions, the system triggers liquidation to prevent the account balance from turning negative. ###**Liquidation in Cross Margin Mode** In cross margin mode, all positions share the margin in the account, and the maintenance margin ratio (MMR) is uniform. Unrealized PnL is included in the total margin balance, and when the MMR falls to 100% or below, liquidation will be triggered. MMR = Margin Balance / Maintenance Margin Margin Balance = Funds in USDT for Positions in Cross Margin Mode + Total Unrealized Profits for Positions in Cross Margin Mode Mainte––nance Margin = Sum of Maintenance Margins for All Positions in Cross Margin Mode ###**Liquidation in Isolated Margin Mode** In isolated margin mode, when the MMR for a position falls to 100% or below (i.e., the margin balance is equal to or lower than the position's maintenance margin), liquidation will be triggered. Each position has an independent MMR, and whether a position triggers liquidation is assessed independently. MMR = Position Margin Balance / Position Maintenance Margin Note: If a user holds hedging positions in isolated margin mode, both positions exist independently, and extreme market fluctuations may lead to separate liquidations. Please refer to Position Mode to learn about the detailed explanation of isolated and cross margin modes. ## Specific Process for Liquidation 1. Trigger condition: When the MMR falls to 100% or below, liquidation will be triggered. 2. Canceling open orders: The system will cancel all unfilled orders (including strategy orders). 3. Adjusting risk limits for tiered liquidation: The system will lower the risk limit of the contract position by one tier and forcibly liquidate the portion of the position that exceeds the limit. 4. Determining whether to stop liquidation: During the tiered liquidation process, the MMR will be checked to see if it has rebounded to 100% or above. If it has, liquidation stops; if not, the risk limit will continue to be lowered, repeating this step until the MMR rebounds to 100% or all positions are liquidated, then the liquidation is finished. ## Notice After liquidation is triggered, the system will place orders at the position bankruptcy price. For details on the calculation of the bankruptcy price, please refer to Estimated Liquidation Price and Bankruptcy Price Calculations. Liquidation Trigger Process: The system places an order at the position's bankruptcy price, prioritizing matching it with existing orders in the order book. If market volatility is extreme and the market depth is insufficient to fully liquidate the position at the bankruptcy price, the insurance fund and auto-deleveraging (ADL) mechanism will be triggered. Note: Orders placed at the bankruptcy price are not part of the liquidation process but are factors within it. In isolated margin mode, each position's margin is calculated independently, so there is no order selection for liquidation contracts. In cross margin mode, the order of liquidation is arranged based on the liquidity of different markets, from highest to lowest. For example, if liquidation occurs when there are multiple contracts in the account across various markets, the liquidation system will prioritize the contract with the best liquidity and start the liquidation process for that position. If the MMR still does not return to 100% or above after clearing that market's position, the next market contract will be selected for liquidation. If at any point during the liquidation process, the MMR returns to 100% or above, the liquidation will stop. Note: Detailed records of liquidations can be viewed in the "Position History." ## FAQ **Q1: How to reduce the risk of liquidation?** Please refer to Beginner's Guide to Avoiding Liquidation. **Q2: What are the differences in liquidation between isolated margin and cross margin mode?** * In isolated margin mode, the margin for each position in the account is calculated independently. When a liquidation occurs, the losses incurred will only affect the corresponding position's margin. For example, if you open a position with 100 USDT at 10x leverage, only 10 USDT is needed as margin. If that position is liquidated, the maximum loss will be limited to 10 USDT. * In cross margin mode, all positions share a common MMR. When a liquidation occurs, regardless of whether the positions are profitable or losing, they can be liquidated. The system will prioritize markets based on liquidity from highest to lowest and perform liquidations in that order. At the end of the liquidation, all positions in the account may be closed, or some may remain, depending on whether the MMR can return to 100% or above during the liquidation process. **Q3: What is the ** **insurance fund** **, and how does it relate to liquidation?** The insurance fund grows mainly from the liquidation surplus. When a liquidation occurs, the order is placed at the bankruptcy price and matched in the market. If the actual fill price is better than the bankruptcy price, the resulting surplus goes into the insurance fund. If the order still cannot be filled when the mark price hits the bankruptcy price, the insurance fund will be used for compensation. **Q4: How is the estimated liquidation price calculated? What is the contract multiplier?** The calculation of the estimated liquidation price varies depending on the contract type. For more details, please refer to Estimated Liquidation Price and Bankruptcy Price Calculations. In BTC-Margined (BTC-M) perpetual contracts, there is no concept of a multiplier, while in USDT-Margined (USDT-M) perpetual contracts, the multiplier adjusts the contract's price unit. For example, the multiplier for the ETCUSDT contract is 0.1. **Q5: What is the process for auto-deleveraging (ADL)?** If the insurance fund is insufficient to support a liquidation order, the ADL system will be activated and reduce the position of the order with the highest return from reverse positions, in order to close the unfilled liquidation order. The order will eventually be filled at the bankruptcy price. For the specific calculation process, please refer to Estimated Liquidation Price and Bankruptcy Price Calculations.

Liquidation Process