Trading
Liquidations
What happens when a position runs out of margin, who can liquidate, and where the fee goes.
When a position is liquidated
A position can be liquidated when its equity (margin plus unrealised profit or loss, less funding) falls below the maintenance margin: 8% of position value on majors and 15% on long-tail markets.
Your liquidation price is always shown on the trade screen. To move it further away, add margin or reduce the position.
Who liquidates
Anyone. liquidate(market, account) is permissionless, and the contract checks eligibility itself, so a healthy position cannot be liquidated. The Neap keeper also scans open positions every few seconds as a fallback.
The risk engine decides whether to close part of the position or all of it.
Liquidation fee
| Value | |
|---|---|
| Fee | 5% of the closed value, capped at 50 USDC |
| To the liquidator | 60%, paid in the same transaction |
| To the market's insurance fund | 40% |
The fee comes out of the liquidated account's remaining margin. Whatever is left after the fee stays yours.
Safeguards
- The mark price moves in capped steps per block, so a single bad print cannot liquidate you.
- No liquidation happens while the price is more than one hour old.
- Maintenance margin is sized to cover the largest allowed price move plus the liquidation fee, which keeps bad debt rare.
If a liquidation leaves a shortfall
- The market's insurance fund pays first.
- If that is not enough, winners in that market take a visible pro-rata haircut on unpaid profit.
- The loss never crosses into another market. Deposited margin in other markets is untouched.