Automatic Reduction and Mandatory Liquidation

The fluctuation of price may causes the remaining equity of a position to be negative, thus cause unavoidable risk to the system. Derify protocol may automatically reduce or liquidate positions according to the margin level of them.

Automatic Reduction

When remaining margin level is lower than the Maintenance Margin Level (3%) but higher than Liquidation Margin Level (1%), system will automatically reduce the position until it's margin level is higher than the Maintenance Margin Level (3%).

Mandatory Liquidation

When remaining margin level is lower than the the Liquidation Margin Level (1%), system will automatically close the position, any remaining margin will be allocated to the insurance pool.