1. What Is Tiered Margin Ratio System
The tiered margin ratio system runs in a way where the higher the borrowing amount, the greater the maintenance margin ratio is required and the lower the maximum leverage a user can use. The maintenance margin ratio is the minimum margin requirement to maintain a position. If the margin falls below the maintenance margin ratio, liquidation will occur under the tiered liquidation system. Partial liquidation will take place so that unaffected positions are retained when a large position reaches its liquidation trigger.
The following is the tiered margin ratio table for BTC/USDT margin trading:
For further details, please refer to the tiered margin ratio table for margin trading
For example, a user borrows 120 BTC (base currency), which falls within Tier 3 (100 – 150 BTC), and also USD10,000 (quote currency), which falls within Tier 1 (USD0 - 500,000). His tier is determined by whichever is the highest, which is Tier 3 in this case. Therefore, his maintenance margin ratio is 7%, and the maximum leverage available is 8.69x.
2. Partial liquidation system
Our partial liquidation system is a risk control system used to lower the risks of market fluctuation and margin call loss caused by liquidation of large positions. For example, if a user’s tier is Tier 2 or above, and his margin is lower than required by the maintenance margin ratio of the tier, partial liquidation will occur. Our system will partially reduce his position size to that of Tier 1. After bringing the user’s tier down by one tier, if the amount of his margin can meet the maintenance margin ratio of the new tier, partial liquidation will stop. If not, partial liquidation will continue.
3. Full liquidation system
If a Tier 1 user’s margin is lower than the maintenance margin ratio of the tier, or a Tier 2 or above user’s margin is lower than the maintenance margin ratio of Tier 1, full liquidation will occur. Our full liquidation system is employed to minimize the risks of cascade liquidation and margin call loss (which results in failure to execute orders after full liquidation) due to strong crypto market fluctuation.