Security & Risk
Liquidation
Forced closure of a leveraged position when collateral falls below the maintenance margin.
By Protocol Signal Research · Research Desk
When a perp position's collateral falls below the venue's maintenance margin requirement, the position is closed by a liquidator or the protocol itself. Liquidation models differ: partial liquidations, full liquidations, insurance fund top-ups, and ADL (auto-deleveraging) all change effective risk for traders.