Liquidation
Liquidation
A position can be liquidated once its P/L drops below the market's liquidation threshold. For example, a user submits a 10 ETH position at 10×. The margin tied to the position is 1 ETH. Assuming the liquidation threshold for the market is -99%, if the position's P/L reaches -0.99 ETH, the position can be liquidated. When a position is liquidated, its margin is transferred to the liquidity pool and the position is closed. There are no liquidation fees and no other positions in your account are affected.
Liquidation Process:
Threshold: When a user's position reaches a loss of -100% from their initial margin for a position, the liquidation process is triggered. This threshold is in place to protect both the user and the platform from further losses.
Liquidation Trigger: Once the threshold is met, the user's position is flagged for liquidation.
Liquidation Execution: After the user has been notified, the liquidation process will be initiated by the platform. The user's position will be automatically closed, and their remaining funds will be converted into stablecoins or the default liquidation currency specified by Tensor Market.
Fee Deduction: A liquidation fee will be deducted from the user's remaining funds to cover the costs associated with the liquidation process. The fee structure and percentage will be communicated to the user in advance.
Reporting and Transparency: Tensor Market will provide users with a clear breakdown of the liquidation process, including the final amount received after liquidation, any fees incurred, and the reason for the liquidation.
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