# Liquidation Mechanism and Liquidation Price Calculation (USDT-M Futures)

### 1. Overview of Liquidation

YUBIT uses the **Mark Price** to reduce the risk of forced liquidations caused by low liquidity or market manipulation. Both your liquidation price and unrealized PnL are calculated based on the mark price.

#### (1) Isolated Margin Mode

Liquidation is triggered when:\
**Position Margin + Unrealized PnL ≤ Maintenance Margin**\
In other words: **Margin Ratio = 100%**

#### (2) Cross Margin Mode

Liquidation is triggered when:\
**Cross Account Equity (excluding isolated margin, isolated unrealized PnL, and all open order margin) ≤ Cross Maintenance Margin**\
In other words: **Margin Ratio = 100%**

#### (3) Liquidation Process

* Once liquidation is triggered, the liquidation engine takes over at the liquidation price.
* The process does not go through the order matching system, so the liquidation price will not appear in trade history or on K-line charts.
* After liquidation:
  * If the position is closed at a better price than the liquidation price, the remaining margin is injected into the insurance fund.
  * If the position closes worse than the liquidation price, leading to negative equity, the insurance fund covers the loss.
  * If the insurance fund is insufficient, the **Auto-Deleveraging (ADL)** system will take over the position.

***

### 2. Liquidation Price Calculation

#### (A) Isolated Margin Mode

Each position has its own allocated margin, independent of the trader’s account balance.

**Formulas**

* Long (Buy):\
  `Liquidation Price = Entry Price – [(Initial Margin – Maintenance Margin) ÷ Contract Size] – (Additional Margin ÷ Contract Size)`
* Short (Sell):\
  `Liquidation Price = Entry Price + [(Initial Margin – Maintenance Margin) ÷ Contract Size] + (Additional Margin ÷ Contract Size)`

Where:

* Position Value = Contract Size × Entry Price
* Initial Margin (IM) = Position Value ÷ Leverage
* Maintenance Margin (MM) = (Position Value × MMR) – Maintenance Margin Deduction
* Maintenance Margin Rate (MMR) depends on your risk tier.

**Examples**

1. **Long Position (50x leverage, no extra margin)**

* Entry: 1 BTC at 20,000 USDT
* IM = 20,000 ÷ 50 = 400 USDT
* MM = 20,000 × 0.5% = 100 USDT
* Liquidation Price = 20,000 – (400 – 100) = **19,700 USDT**

2. **Short Position with Additional Margin**

* Entry: 1 BTC short at 20,000 USDT, 50x leverage
* IM = 400 USDT
* MM = 100 USDT
* Additional Margin: 3,000 USDT
* Liquidation Price = 20,000 + (400 – 100) + 3,000 = **23,300 USDT**

3. **Long Position with Funding Fee Deduction**

* Entry: 1 BTC long at 20,000 USDT, 50x leverage
* Initial liquidation price = 19,700 USDT
* Funding Fee: –200 USDT (deducted from position margin)
* New Liquidation Price = 20,000 – (400 – 100) – (–200) = **19,900 USDT**

***

#### (B) Cross Margin Mode

In cross margin, the liquidation price can change dynamically because all available balance and unrealized PnL across positions are shared. Liquidation occurs only when **available balance = 0** and maintenance margin is insufficient.

**Examples**

1. **Opening a Long (No Fees)**

* Trader A opens 2 BTC long at 10,000 USDT, 100x leverage
* Available Balance = 2,000 USDT
* MM = 2 × 10,000 × 0.5% = 100 USDT
* Sustainable Loss = 2,000 – 100 = 1,900 USDT
* Price Drop Allowed = 1,900 ÷ 2 = 950 USDT
* Liquidation Price = 10,000 – 950 = **9,050 USDT**

2. **With Unrealized Profit**

* Price rises to 10,500 USDT → Unrealized PnL = 1,000 USDT
* Sustainable Loss = 1,800 + 200 – 100 + 1,000 = 2,900 USDT
* Price Drop Allowed = 2,900 ÷ 2 = 1,450 USDT
* Liquidation Price = 10,500 – 1,450 = **9,050 USDT**

**Formulas**

* With Unrealized Profit:
  * Long: `LP = [Entry Price – (Available Balance + IM – MM)] ÷ Net Position Size`
  * Short: `LP = [Entry Price + (Available Balance + IM – MM)] ÷ Net Position Size`
* With Unrealized Loss:
  * Long: `LP = [Mark Price – (Available Balance + IM – MM)] ÷ Net Position Size`
  * Short: `LP = [Mark Price + (Available Balance + IM – MM)] ÷ Net Position Size`

*Note: Actual liquidation price may slightly differ due to closing fees.*

***

### 3. Risk Management

To avoid liquidation, maintain sufficient margin levels and monitor market conditions. For more details on maintenance margin rates and risk management, refer to the **Risk Parameters documentation**.

***

### 4. Tools

You can track **Mark Price**, liquidation levels, and other real-time metrics via YUBIT’s trading interface or by contacting customer support.