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

  1. 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

  1. 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

  1. 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.

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