❗Force Close
Passive liquidation is a crucial mechanism in futures trading aimed at maintaining market stability and safeguarding traders from significant losses. In SubstanceX, there are two mechanisms that trigger passive liquidation of a user's position:
Liquidation
When a user's net position value falls below the minimum maintenance margin, liquidation is triggered.
Net value = Collateral + PNL after fees.
Minimum maintenance margin = Size * Mark Price * MaintenanceMarginRatio + Est. Liq. fees.
For Long: Est. Liq. price = (Collateral + Fees - Entry price * Size) / (Size * (MaintenanceMarginRatio + Est.LiquidateFeeRatio - 1) For Short: Est. Liq. price = (Collateral + Fees + Entry price * Size) / (Size * (MaintenanceMarginRatio + Est.LiquidateFeeRatio + 1)
Typically, the Est.LiquidateFeeRatio for each pair is equal to its TradingFee.
Liquidation will only result in the user losing all the collateral associated with that position. The balance in the user's Exchange Wallet will not be affected.
Case Study:
| Pairs | BTC/USD |
|---|---|
Long / Short | Long |
Collateral （$） | 10,000.00 |
Entry Price（$） | 30,000.00 |
Leverage | 30.00 x |
Size | 10.00 |
Mark Price（$） | 31,000.00 |
Fees（$） | -200.00 |
MaintenanceMarginRatio | 0.5% |
TradingFeeRate | 0.08% |
Est. Liq. Price（$） | 29,165.95 |
MaxProfit Liquidation
When a user's PNL on a position reaches ten times the collateral, a maxprofit liquidation is triggered, and the system will close the perpetual position at market price.
Max Profit = Collateral * MaxProfitRatio
For Long : Max Profit Price = Entry Price + Max Profit / Size
For Short : Max Profit Price = Entry Price - Max Profit / Size
Please note that max profit does not represent actual earnings. Actual earnings need to account for pending fees.
The MaxProfitRatio may vary for different trading pairs. You can find specific details in Perpetual Specifications.
Case Study：
| Perps | BTC/USD |
|---|---|
Collateral （$） | 10,000.00 |
Entry Price（$） | 30,000.00 |
Leverage | 30.00 x |
Size | 10.00 |
MaxProfitRatio | 10 |
Max Profit（$） | 100,000.00 |
Max Profit Price（$） | 40,000.00 |
Close Price（$） | 40,000.00 |
Fees（$） | -100.00 |
PnL（$） | 99,900.00 |