Liquidation

AnteX adopts a three-step tiered liquidation mechanism to manage positions that fall below the maintenance margin requirement. This multi-layered design aims to minimize market impact while ensuring efficient use of user collateral to cover potential losses.

Liquidation Trigger Conditions

• When an account’s margin ratio falls below the Maintenance Margin Rate (MMR), the position enters the liquidation process.

• The MMR is determined by the leverage multiple and position size; higher leverage corresponds to a higher MMR.

Liquidation Process

Partial Liquidation

• The system first reduces part of the position to lower risk exposure.

• Positions are unwound gradually when necessary, rather than liquidating the entire position at once.

• This reduces the probability of users being fully liquidated.

Full Liquidation

• If margin remains insufficient after partial liquidation, the system triggers a full liquidation.

• The position is forcibly closed to prevent further losses beyond collateral.

Insurance Fund Backstop

• In extreme market conditions, if liquidation results in negative account equity, losses are covered by the insurance fund.

• This ensures system stability and prevents contagion risk to other users.

Liquidation Price Calculation

The liquidation price is determined by the following factors:

• Current leverage multiple

• Position size

• Available margin balance

• Periodic settlement of funding rates (dynamically impacts the liquidation price of isolated positions)

The system recalculates the liquidation price of isolated positions after each funding settlement, ensuring transparent and controllable risk management.

User Protection Mechanisms

• Forced Withdrawal Protocol: Even during liquidation, a user’s available balance can still be securely withdrawn on-chain.

• Isolated vs. Cross Margin: In isolated margin mode, risks are confined to the specific position; in cross margin mode, losses may extend to other funds in the account.