How do liquidation and ADL work for on-chain perpetuals?

What are the liquidation rules for on-chain perpetual futures?

If your margin no longer meets the requirements for your on-chain perpetual futures positions, the system triggers liquidation to reduce or close the affected positions. This FAQ explains what triggers liquidation and how it affects your positions, fees, and open orders.

When is liquidation triggered for on-chain perpetual futures?

Liquidation is triggered when the maintenance margin ratio reaches or exceeds 100%, or when equity falls below zero, for the relevant margin currency or isolated position. A higher maintenance margin ratio means a greater risk of liquidation. Maintenance margin ratio = (maintenance margin required for your positions + liquidation trading fee) ÷ relevant equity × 100%. The system uses the mark price to calculate your maintenance margin ratio and checks for liquidation when prices update. Maintenance margin is the minimum margin needed to keep your positions open. The amount depends on your position size and the applicable position tier.

How does liquidation differ between cross margin and isolated margin in on-chain perpetual futures?

• Cross margin: the maintenance margin ratio is calculated separately for each margin currency. Cross margin positions that use the same margin currency share risk, so liquidation may affect several positions using that currency.

• Isolated margin: the maintenance margin ratio is calculated separately for each isolated position. Equity equals that position’s margin balance plus unrealized profit and loss. Liquidation applies to the isolated position that meets the trigger conditions.

Will all my on-chain perpetual futures positions be closed at once during liquidation?

Not necessarily. The on-chain liquidation system handles the affected positions based on their risk:

• Offset long and short positions first: if you hold both long and short positions in the same contract in hedge mode, the system offsets equal amounts at the mark price until the smaller side is fully closed. If your maintenance margin ratio falls below 100%, liquidation stops.

• Attempt partial liquidation: if liquidation is still needed, the system calculates how much to reduce based on your position tiers and attempts to restore an acceptable risk level through partial liquidation. If several contracts are involved, it prioritizes those with better liquidity.

• Close all affected positions if needed: if partial liquidation can’t restore an acceptable risk level, the system continues and may close all cross margin positions using the affected margin currency, or the entire affected isolated position

On the third and any subsequent position-reduction trigger within any 10-second window, the system closes all positions in the affected margin scope. This applies separately to each margin currency in cross margin and each isolated position. A temporary recovery in your maintenance margin ratio during that window doesn’t reset the trigger count.

What price is used to liquidate on-chain perpetual futures positions?

The system takes over liquidated positions using the mark price at the time of liquidation. The estimated liquidation price shown on the page is only a reference for assessing risk. It doesn’t trigger liquidation and isn’t guaranteed to match the actual liquidation price. Liquidation depends on whether your maintenance margin ratio or equity meets the trigger conditions at that time.

What fees and margin are deducted during liquidation of on-chain perpetual futures?

When the system takes over your position, it deducts:

• Liquidation trading fee, calculated using the user’s taker fee rate for the position taken over

• The full maintenance margin amount corresponding to the position taken over

No liquidation trading fee is charged when long and short positions are offset at the start of liquidation. If the relevant equity is insufficient to cover these deductions, the system covers the shortfall and records the liquidation compensation in your on-chain account cash flows.

Will liquidation of on-chain perpetual futures automatically cancel my open orders?

No. Your regular open orders remain in place during liquidation. The maintenance margin and estimated liquidation trading fee used in the maintenance margin ratio only account for open positions. The system checks your risk again when an order fills. If the fill causes your maintenance margin ratio to reach or exceed 100%, liquidation may be triggered again. Review your open orders after liquidation.

How can I reduce my liquidation risk in on-chain perpetual futures?

• Monitor your maintenance margin ratio, mark price, and margin balance instead of relying only on the estimated liquidation price

• Add margin to the relevant margin currency balance or isolated position, or reduce your positions before liquidation is triggered

• Review your open orders to avoid increasing your exposure when they fill

You can still add margin during liquidation. However, doing so doesn’t reset the trigger count within the 10-second window and doesn’t guarantee that liquidation will stop.

What are the Auto-Deleveraging rules for on-chain perpetual futures?

What's ADL in on-chain trading?

Auto-deleveraging, or ADL, is a final risk-control process that reduces open positions when the normal liquidation process and the applicable security fund can't fully absorb a loss. Its purpose is to prevent any user accounts or funds from ending a block with negative equity. ADL matches a liquidated position directly with eligible opposing positions instead of waiting for an order to fill in the market.

When can ADL happen in on-chain trading?

ADL can happen when a liquidated position can't be safely taken over by its security fund, even after available supplementary funds are considered. A user-level ADL will be executed before the takeover.It can also happen after a security fund takes over positions and its equity falls below a certain required threshold. A security-fund-level ADL will be executed after the takeover. Please note that there may be no advance warning of any occurrence of an ADL.

Which of my positions can be affected by ADL in on-chain trading?

For cross-margin positions with negative account equity, on-chain trading first applies ADL to positions in contracts that the security fund can't take over. If your equity remains negative after that step, the system may further apply ADL to your remaining positions.For isolated-margin positions, ADL applies to the affected isolated position when its position equity is negative and the security fund can't take it over.

How does on-chain trading choose ADL counterparties?

Eligible positions on the opposite side are ranked by leveraged profit-and-loss (PnL) ratio. Positions with a higher leveraged PnL ratio rank earlier in the ADL queue.Your position direction, profitability, position value, and equity affect this ranking. A higher ADL ranking means your position is more likely to be selected if ADL is required.Leveraged PnL ratio：

1. Long & profitable = [(mark price - entry price) / entry price] * (position value / equity)

2. Long & loss-making = [(mark price - entry price) / entry price] / (position value / equity)

3. Short & profitable = [(entry price - mark price) / mark price] * (position value / equity)

4. Short & loss-making = [(entry price - mark price) / mark price] / (position value / equity)

**isolated position uses position equity, and cross position uses account equity

What price does on-chain trading use for ADL?

The price depends on the ADL stage:

• User-level ADL (including existing security-fund positions) uses the previous mark price

• Security-fund-level ADL uses the current mark price

• ADL-related position netting uses the current mark price at all stages

The ADL trade reduces or closes both the affected position and the selected counterparty position at the same execution price.

Can a security fund be an ADL counterparty in on-chain trading?

Yes. Any eligible on-chain account, whether a user account or a security fund account, with an opposing position, may enter the ADL counterparty queue.

How can I reduce my ADL risk in on-chain trading?

You can lower leverage, add margin, reduce concentrated positions, and realize PnL regularly. These steps can reduce risk, but they don't guarantee that ADL won't occur during extreme market conditions.