Important: Margin trading is only offered to eligible institutional customers with trading accounts.
Warning: Margin trading is a high risk activity. Please read carefully the Risk Warnings and Terms for Margin Services on bullish.com.

Liquidation refers to the process of reducing your trading account’s risk, by increasing your Margin and/or decreasing your Margin Requirements.

Liquidation is fully automated and can involve the following actions (shown in order of priority):

  • Cancelling open orders and terminating AMM Instructions
  • Partially or fully closing your derivative positions
  • Partially or fully converting your collateral assets into more liquid assets
  • Repaying unsettled losses
  • Repaying and closing open margin loans

Health Indicators 

Visit the Health indicators article to learn more about what actions are available at the various health levels. 

Liquidation Engine

Since the Margin and the various Margin Requirements indirectly depend on Notional Values, which in turn depend upon constantly varying market prices, all these values are recalculated at least every 30 seconds to determine what status the account is in and therefore whether any actions need to be taken.

Health Level- Danger

When your account is in health level “Danger” then the liquidation engine will cancel all open limit orders on your behalf and start to initiate partial liquidation, in a best-effort basis to reduce leverage by selling some collateral if necessary and partially repaying debts.

  1. Cancel all open spot orders and all open perpetual orders (if any)
  2. Terminate any one open AMM Instruction (either perpetual or a spot AMM Instruction) chosen randomly, if any are open
  3. Convert collateral to USDC (so that 10%* of debt value is held in USDC*) via limit orders in spot markets at index price ± 1%, trading the highest collateral-rated assets first
  4. Reduce open perpetual positions by 10% via limit orders at mark price ± 1%*
  5. Use whatever USDC* is available at that time to repay any open loans on a pro-rata basis

Debt value for a trading account includes such account’s unsettled losses, outstanding principal, interest, fees and expenses of margin loans, outstanding fees incurred with regard to transactions in perpetuals contracts and any other costs and fees incurred with regard to such unpaid amounts.

Health Level- Critical

When your account is in health level “Critical”, the liquidation engine will start full liquidation. The following procedure will be followed:

  1. Cancel all open spot orders and all open perpetual orders (if any)
  2. Terminate all open AMM Instructions in parallel, if any are open
  3. Convert collateral to USDC (so that 100%* of debt value (see above) is held in USDC*) via limit orders in spot markets at index price ± 3%*, trading the highest collateral-rated assets first
  4. Close all open perpetual positions via limit orders at mark price ± 3%*
  5. Use whatever USDC* is available at that time to repay any open loans on a pro-rata basis

Note that all liquidation orders charge an additional 50bps fee if filled.

Health Level- Suspended

When your account is in health level “Suspended” then the account is considered to have defaulted. The liquidation engine will take the following steps with respect to your account before it is allowed to go into Default under the existing Default process of the Margin service.

  • to terminate any open AMM Instructions; and
  • then auto-deleverage all open perpetual positions.

Viewing the Current Leverage

To view your Current Leverage from your account:

  1. Go to the left-hand navigation and choose Portfolio.
    Portfolio tab in left-hand navigation.png
  2. Choose Borrowing.
  3. View your Current Leverage and Current LTV under the Borrowing tab.
    current leverage from borrowing.png
  •  

You can also view your Current Leverage in Overview

  1. Go to the left-hand navigation and choose Portfolio.
    Portfolio tab in left-hand navigation.png
  2. Choose Overview.
  3. View your Current Leverage.
    Current Leverage from Portfolio tab.png
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