What Triggers Liquidation?
When a user's position falls into Tier 2 or below and their margin ratio drops below the required maintenance margin rate + liquidation fee rate for that tier—OR—if the position is in Tier 3 or above but the margin ratio falls below Tier 1's maintenance margin rate + liquidation fee rate, the system automatically delegates all contracts (for cross-margin) or positions (for isolated margin) to the liquidation engine at the bankruptcy price (where the margin ratio hits zero).
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Purpose of Early Liquidation
This preemptive liquidation mechanism aims to prevent:
- Chain-reaction liquidations due to extreme cryptocurrency volatility.
- Negative equity events (unfilled liquidation orders causing losses beyond collateral).
Key Trading Concepts Explained
1. Spot Trading (Coin-to-Coin)
Spot trading involves exchanging one digital asset for another directly. Popular trading pairs include:
- USDT, USD(S), and Crypto markets (BTC, OKB, ETH).
2. Mark Price vs. Index Price vs. Order Price
| Term | Definition |
|---|---|
| Mark Price | Used to calculate unrealized P&L: Spot Index Price + Basis Moving Avg. |
| Index Price | Reference price derived from major spot exchanges. |
| Order Price | Actual price at which orders are placed. |
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Blockchain Innovations
MXC Protocol (LPWAN + Blockchain)
- Solves: IoT spectrum conflicts via decentralized super nodes.
- Enables: Smart bidding for resource allocation and cross-chain data markets (e.g., Polkadot's DataHighway).
Dogecoin (DOGE)
Originally a meme coin, DOGE gained traction due to:
- Community tipping culture.
- Decentralized peer-to-peer transactions.
Advanced Instruments
Options Contracts
- Types: Call/Put options for BTC and ETH.
- Platforms: Simplified and professional trading interfaces.
Grayscale Trust Assets
11 listed assets from Grayscale’s investment funds, including:
- Bitcoin (BTC)
- Ethereum (ETH)
- Others in the "Grayscale Concept Coins" section.
FAQs
Q: How can I avoid liquidation?
A: Monitor margin ratios closely and top up funds before reaching critical thresholds.
Q: What’s the difference between cross-margin and isolated margin?
A: Cross-margin pools collateral across positions, while isolated margin restricts risk to individual positions.
Q: Why use mark price instead of last traded price?
A: It reduces unnecessary liquidations during volatile but short-lived price spikes.
Disclaimer: This content is for informational purposes only and does not constitute financial advice. Digital assets carry high risks—assess your risk tolerance before trading. © 2025 OKX. Licensed use permitted with attribution.