Liquidation Process

Liquidation Process

In order to avoid unnecessary liquidations, 58COIN will retain the existing positions and cancel all unexecuted orders on the current contract. If this does not satisfy the maintenance margin requirement then the position will be taken over by the “liquidation engine” at the bankruptcy price.

If 58COIN is able to liquidate the position at better than the bankruptcy price, the additional balance will be added to the Insurance Fund.

If 58COIN is unable to liquidate the position at the bankruptcy price, we will spend the Insurance Funds on aggressing the position in the market in an attempt to close it. If this still does not close the liquidated order, this will then lead to an Auto-Deleveraging event.

You will be notified if a liquidation occurs.

Auto Deleveraging is targeted at the liquidation orders that cannot be executed after adding the Insurance Fund or the Insurance Fund is depleted.

According to market principles, you must trade with a counterparty. If the counterparty disappears (unavailable in the market), his positions in the market will reduce accordingly.

Auto-Deleveraging Ranking:

Deleveraging priority is calculated by profit and leverage:

PNL Percentage (long): (Closing Price – Opening Price) / Opening Price * 100% * Leverage

PNL Percentage (short): (Opening Price – Closing Price) / Opening Price * 100% * Leverage

You will be notified if an Auto-Deleveraging occurs.

3. Insurance Fund

USDT Perpetual Contract uses an Insurance Fund to avoid Auto-Deleveraging in traders' positions. The fund is used to aggress unfilled liquidation orders before they are taken over by the auto-deleveraging system. The Insurance Fund grows from liquidations that were able to be executed in the market at a price better than the bankruptcy price of that particular position.

Special reminder: In order to better guarantee the equity of users, currently, 58COIN will fully pay the insurance fund first (should be repaid later), this is to avoid the occurrence of ADL caused by insufficient insurance funds.