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Gate.io Announcement on the Upgraded Liquidation Mode and the New Margin Mechanism for Hedging Positions
Gate.io Announcement on the Upgraded Liquidation Mode and the New Margin Mechanism for Hedging Positions
2024-07-10 09:42:29 UTC
9023 Read
To further improve user experience and minimize risks, Gate.io has upgraded the liquidation process and trigger conditions, and hedging positions. The major changes include:
1) Liquidation will be triggered when the maintenance margin level is no greater than 100% (instead of when the mark price hits the liquidation price). In cross margin mode, margin is shared by all positions; the unrealized profits and losses are offset and included into the total margin balance calculation, helping reduce the liquidation risk.
2)When liquidation is triggered, the positions will be liquidated in tiers based on risk limits. When, at any tier, the maintenance margin level rises above 100%, the liquidation process will stop there, thus reducing losses to users.
3) In hedge mode, a standard margin will be required for the higher-value position to enter the market. The unrealized profits and losses are offset and liquidation is triggered when the maintenance margin level is no greater than 100%.
Notice:
Starting July 15, 2024, Gate.io will be gradually migrating to the new liquidation mode as well as new margin mechanism for hedging positions. To experience the service of this upgrade, you have to upgrade to the App version 6.9 or above and make sure you have no positions or open orders in your futures account. Please make timely updates to your App. For holding positions, the liquidation mode and hedging positions' margin mechanism will be the same as before.
1) Liquidation Trigger
Old VS. New
Old: Your position will be liquidated when the position margin balance is below the maintenance margin, and you will lose all the margin used for the position. Liquidation will be triggered when the mark price hits the liquidation price.
New: Maintenance margin level (MMR) is used to indicate risk. Maintenance Margin Level = Total Margin Balance / Required Position Maintenance Margin. The position will be reduced or liquidated when the maintenance margin level falls to 100%. Maintenance margin level is decisive in liquidation, and the liquidation price is for reference only.
Optimizations:
(1) Margin is shared across all positions. If a position is losing, the unrealized profit of winning positions can be used as margin to avoid liquidation.
(2) Increased capital efficiency with reduced liquidation frequency.
2) Tiered Liquidation
Old VS. New
Old: All positions will be closed in an liquidity event.
New: When liquidation is triggered, the engine will calculate if the maintenance margin level goes back to 100% or above at lower risk limit level. If yes, then the liquidation will stop there. If not, then the liquidation will continue. When liquidating positions, positions in the most liquid market (the future market with highest 24 hour trading volume) will be liquidated first. The insurance funds and ADL trigger mechanism remain unchanged.
Optimization:
The tiered liquidation mechanism reduces the risk of loss by gradually reducing position amount.
3) Hedge Mode
Old VS. New
Old: In cross margin mode, unrealized PNL and margin occupied of two hedging positions could be offset.
New: In cross margin mode, a standard margin will be required for the higher-value position to enter the market. The unrealized profits and losses are offset and included into the total margin balance calculation. Liquidation will be triggered when the maintenance margin level is no greater than 100%.
Optimizations
(1) Margin is shared by all positions. If a position is losing, the unrealized profit of wining positions can be used to avoid liquidation.
(2) For the same trading pair in different sides, a standard margin will be required for the higher-value position to enter the market. This way improves the utilization of funds and no more margin will be required when closing out one-side position.
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Podcast: https://gateio.buzzsprout.com/?ch=buzzs
Gate.io Team
July 10, 2024
1) Liquidation will be triggered when the maintenance margin level is no greater than 100% (instead of when the mark price hits the liquidation price). In cross margin mode, margin is shared by all positions; the unrealized profits and losses are offset and included into the total margin balance calculation, helping reduce the liquidation risk.
2)When liquidation is triggered, the positions will be liquidated in tiers based on risk limits. When, at any tier, the maintenance margin level rises above 100%, the liquidation process will stop there, thus reducing losses to users.
3) In hedge mode, a standard margin will be required for the higher-value position to enter the market. The unrealized profits and losses are offset and liquidation is triggered when the maintenance margin level is no greater than 100%.
Notice:
Starting July 15, 2024, Gate.io will be gradually migrating to the new liquidation mode as well as new margin mechanism for hedging positions. To experience the service of this upgrade, you have to upgrade to the App version 6.9 or above and make sure you have no positions or open orders in your futures account. Please make timely updates to your App. For holding positions, the liquidation mode and hedging positions' margin mechanism will be the same as before.
1) Liquidation Trigger
Old VS. New
Old: Your position will be liquidated when the position margin balance is below the maintenance margin, and you will lose all the margin used for the position. Liquidation will be triggered when the mark price hits the liquidation price.
New: Maintenance margin level (MMR) is used to indicate risk. Maintenance Margin Level = Total Margin Balance / Required Position Maintenance Margin. The position will be reduced or liquidated when the maintenance margin level falls to 100%. Maintenance margin level is decisive in liquidation, and the liquidation price is for reference only.
Optimizations:
(1) Margin is shared across all positions. If a position is losing, the unrealized profit of winning positions can be used as margin to avoid liquidation.
(2) Increased capital efficiency with reduced liquidation frequency.
2) Tiered Liquidation
Old VS. New
Old: All positions will be closed in an liquidity event.
New: When liquidation is triggered, the engine will calculate if the maintenance margin level goes back to 100% or above at lower risk limit level. If yes, then the liquidation will stop there. If not, then the liquidation will continue. When liquidating positions, positions in the most liquid market (the future market with highest 24 hour trading volume) will be liquidated first. The insurance funds and ADL trigger mechanism remain unchanged.
Optimization:
The tiered liquidation mechanism reduces the risk of loss by gradually reducing position amount.
3) Hedge Mode
Old VS. New
Old: In cross margin mode, unrealized PNL and margin occupied of two hedging positions could be offset.
New: In cross margin mode, a standard margin will be required for the higher-value position to enter the market. The unrealized profits and losses are offset and included into the total margin balance calculation. Liquidation will be triggered when the maintenance margin level is no greater than 100%.
Optimizations
(1) Margin is shared by all positions. If a position is losing, the unrealized profit of wining positions can be used to avoid liquidation.
(2) For the same trading pair in different sides, a standard margin will be required for the higher-value position to enter the market. This way improves the utilization of funds and no more margin will be required when closing out one-side position.
Gateway to Crypto
Trade over 1,700 cryptocurrencies safely, quickly and easily on Gate.io
Sign up to enter the crypto gateway and get 40% commission from referrals
Download iOS/Android App right now.
Reach out to us!
Twitter: https://twitter.com/gate_io
GateVIP Twitter: https://twitter.com/Gateio_Inst
Telegram: https://t.me/gate_zh
API Telegram: https://t.me/gateioapi
Instagram: https://www.instagram.com/gateioglobal
Medium: https://gateio.medium.com/
Podcast: https://gateio.buzzsprout.com/?ch=buzzs
Gate.io Team
July 10, 2024
