OceanEx uses Mark Price to avoid unnecessary liquidations and to combat market manipulation. See the Fair Price section for more information.
1. Forced liquidation
1)Calculation
Fixed position under linear contract:
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Long Lp=Hp*Vol*S - (IM-MM)/[(1-R)*VOL*S]
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Short Lp=Hp*Vol*S +(IM-MM)/[(1+R)*VOL*S]
Cross position under linear contract:
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Long Lp=Hp*Vol*S - (available assets+IM-MM)/[(1-R)*VOL*S]
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Short Lp=Hp*Vol*S +(available assets+IM-MM)/[(1+R)*VOL*S]
Lp:Liquidation price ;Hp:Holding price;Vol:Holding amount(Cont) ;S:Contract size;IM:Initial margin;MM:Maintenance margin R:Funding rate
When the position is large and triggers force liquidation, there is a risk that it causes congestion which might cause an impact on the market, and the OceanEx contract's liquidation engine can use more margin to effectively close positions.
If a position is a force to liquidation, OceanEx system will cancel all unfilled orders for the contract to release the margin and maintain the position. The orders of contracts are not affected.
OceanEx contract uses a partial liquidation method that automatically attempts to reduce the maintenance margin requirement and avoids all positions being force liquidated.
OceanEx cancels all unfilled orders for this contract.
If the maintenance margin requirement is not met at this time, the position will be liquidated.
OceanEx system will attempt to reduce the user's risk limit in the following ways, thereby reducing the margin requirement:
A. Canceling any open orders and then attempting to bring a user down to a Risk Limit associated with their current position.
B. Submitting a FillOrKill order of the difference between the current Risk Limit position size and the position size to satisfy the margin requirement to avoid liquidation.
C. If the position is still in liquidation then the entire position is taken over by the OceanEx and a limit order to close the position is placed at the liquidation price.
For more information about the Risk Limit, please refer to Margin.