📉POSITION LIQUIDATION

Liquidation

Each leverage position of FEDIX FINANCE has a strike price, at which the value of the position is equal to 0. In any exchange that supports leverage positions, there is always a price buffer to liquidate the positions before the collateral is depleted, which is used to protect exchanges from insolvency. FEDIX has a buffer value of 93% for liquidation.

Long position example:

• A user opens a 5x long position of ETH/USD at price $1000.

• Since FEDIX is an inverse perpetual exchange, this position is interpreted by protocol as 5x short position of USD/ETH at price 1/1000.

• The strike price of the inverse short position: 1/1000 - 1/1000 / leverage=0.0008.

• The strike price of the long position: 1/0.0008 = $1250.

• The liquidation price of the inverse short position: 0.0008/0.93 = 0.00086.

• The liquidation price of the long position: 1/0.00086 = $1163.

Short position example:

• A user opens a 5x short position of ETH/USD at price $1000.

• Since FEDIX is an inverse perpetual exchange, this position is interpreted by protocol as 5x long position of USD/ETH at price 1/1000.

• The strike price of the inverse long position: 1/1000 + 1/1000 / leverage = 0.0012.

• The strike price of the short position: 1/0.0012 = $833.

• The liquidation price of the inverse long position: 0.0012 * 0.93 = 0.001116.

• The liquidation price of the short position: 1/0.001116 = $896.

Check out parameter page for more details.

HOW IS LIQUIDATION PRICE DETERMINED?

The liquidation Threshold is set to 80% as default. The remaining margin of the liquidated position are shared as reward among liquidators, Fedix Protocol, and liquidity providers.

If the Oracle price reaches the liquidation price, the position will be liquidated. The liquidation price of a position is calculated using this formula:

Long Position: $entryPrice - (entryPrice * (liquidationThreshold * margin )/ positionSize$

Short Position: $entryPrice + (entryPrice * (liquidationThreshold * margin ) / positionSize$

FOR INSTANCE:

For the 10x ETH long position with entry price at $2000, position size as 5000 USDC with margin as 500 USDC, the liquidation price would be $1840 (2000 - (2000 * (0.8 * 500) / 5000)). If a liquidator liquidates this position at $1840, $100(500 * (1 - 0.8) will be used to pay liquidators, protocol fees and liquidity providers.

For the 10x ETH short position with entry price at $2000, position size as 5000 USDC with margin as 500 USDC, the liquidation price would be $2160(2000 + (2000 * (0.8 * 500) / 5000). If a liquidator liquidates this position at $2160, $100(500 * (1 - 0.8)) will be used to pay liquidators, protocol fees and liquidity providers.

At the launch, FEDIX Protocol team will be the liquidator for all the positions.