Liquidation

When is liquidation triggered?

A position will be liquidated under either of the following conditions:

• The market price reaches the liquidation price.
• The collateral becomes insufficient to cover outstanding fees.

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How is the Liquidation Price calculated?

Long Position

Liquidation Price = Entry Price - (Collateral × Liquidation Loss Rate - Fees) ÷ Position Size (in Quantity)

Short Position

Liquidation Price = Entry Price + (Collateral × Liquidation Loss Rate - Fees) ÷ Position Size (in Quantity)

Terms used above

Fees include: Close Fee, Holding Fee, and Funding Fee.

Liquidation Loss Rate is set per trading pair — 85% on most pairs, 80% on the high-leverage pairs (500BTC/USD, 500ETH/USD) and on MON/USD, LIT/USD, ZEC/USD and XMR/USD.

Position Size (in Quantity) = Initial Collateral × Leverage ÷ Entry Price

Liquidation threshold

A position is liquidated once losses and fees reach the pair's Liquidation Loss Rate — 85% of margin on most pairs, 80% on the high-leverage pairs and a few low-liquidity ones.

Minimum Position Leverage

Positions with leverage below 1x will be automatically closed.

This is a minimum leverage requirement and is separate from standard liquidation — it runs through auto-deleveraging, not the liquidation path, so no Liquidation Loss Rate applies. Users should monitor their position leverage to avoid unexpected auto-closure.

Collateral Value in Liquidation

When a user opens a position, the collateral they provide becomes the position margin after trading fees are deducted. This margin is held in the position’s margin asset, such as LVUSD, LVMON, USDC, MON, or another supported collateral token.

The USD value of the margin is calculated as:

Margin Value in USD = Margin Amount × Margin Asset Price

For example, if a position has 100 USDC as margin and USDC is priced at $1, the margin value is $100.

During liquidation, LeverUp also considers the position’s unrealized profit or loss, funding fees, holding fees, and closing fees. These values are converted into the same asset as the position margin, so they can be compared consistently.

A simplified liquidation condition is:

Total Loss and Fees ≥ Liquidation Threshold × Position Margin

Where:

Total Loss and Fees = Closing Fee + Holding Fee - Funding Fee - PnL

If the position has a loss, PnL is negative, so it increases the total loss. If the position has a profit, PnL is positive, so it reduces the total loss.

The liquidation threshold depends on the market configuration. For example, if a market has an 85% liquidation threshold, the position can be liquidated once the total loss and fees reach 85% of the margin.

Example: MON as Margin

Assume MON is priced at $0.025, and a user opens the minimum $200 position at 10x leverage.

Required Margin Value = $200 / 10 = $20
Margin Amount = $20 / $0.025 = 800 MON

If the market liquidation threshold is 85%, the position becomes liquidatable when loss and fees consume:

Liquidation Threshold = 800 MON × 85% = 680 MON

So if the position’s loss and fees are converted into MON and reach at least 680 MON, the Keeper can liquidate the position.

In USD terms:

680 MON × $0.025 = $17

So this $200 position with 800 MON margin can be liquidated once losses and fees consume roughly $17 worth of MON margin.