V2 - Liquidation

Liquidation rules 
When the debt ratio reaches a certain amount, liquidation will be triggered.
Debt Ratio = Debt Value / Position Value * 100% 
Position Value = Principal + Borrowing = LP Position
Liquidation Example：
Example: Leverage 2X / LP Pool - HT-USDT
1.User deposits 1 HT, and borrows 10 USDT as Debt (1HT = 10 USD) to begin farming. Users Positition value is 1 HT & 10 USDT (20 USD).
2.During extreme market positions, HT drops from 10 USDT to 2 USDT, so the Debt Ratio drops to 83.33% and liquidation is triggered.
DebtRatio=Principal/PositionValue∗100Debt Ratio = Principal / Position Value * 100%
DebtRatio=Principal/PositionValue∗100
DebtRatio=10USDT/(1HT+10USDT)Debt Ratio = 10 USDT / (1HT + 10USDT)DebtRatio=10USDT/(1HT+10USDT)
DebtRatio=10USD/(2USD+10USD)Debt Ratio = 10 USD / (2 USD + 10 USD) 
DebtRatio=10USD/(2USD+10USD)
DebtRatio=83.33Debt Ratio = 83.33%DebtRatio=83.33
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3. With the example in 2. the user’s position value changed from 1 HT + 10 USDT (~20 USDT) to 4.472 HT + 2.236 USDT (~11.18USDT)
1.10USDT will be transferred into the money market
2.0.559 USDT (5%) will be transferred to the liquidator
3.0.621 USDT will be returned to the initial user
Liquidator
At the current stage, Flux Foundation is the sole liquidator for high-efficiency and reducing margin call risks. 5% of all liquidation proceedings will be utilized for $FLUX buy-backs on the secondary market.
Liquidation Flow Chart

V2 - Deposit

V2 - Glossary

Last modified 1yr ago