On GTE, liquidations are triggered when margin falls below required safety levels. In cross-margin accounts, this means the account’s equity (margin balance plus all unrealized PnL) is less than its total maintenance margin across open positions. In isolated-margin mode, each position is checked against its own maintenance requirement. All checks use the mark price. Once flagged, liquidations are carried out position-by-position in steps until the account is restored to health or all positions are closed.

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Types of Liquidations

GTE enforces three types of liquidations to ensure system solvency:
  • Standard Liquidation: when maintenance margin is no longer me.
  • Backstop Liquidation: when 1/3 of maintenance margin is no longer met.
  • Auto Deleveraging (ADL): when the Insurance Fund balance is insufficient to cover bad debt.

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Standard Liquidations

When account_equity < account_maintenance_margin_total (the account health condition fails), the account becomes flagged for liquidation. Liquidation is executed position-level (one leg per tx). L submits {accountId, positionId, units_to_close, execution_price_used}. Execution price is the actual fill price on the standard book (IOC/limit). Partial fills are allowed if at least min_fill_ratio (admin-set) of the order size is filled. Otherwise revert (dust fill guard). Any remainder stays open for subsequent steps (standard or backstop). After the close executes, the forfeitable margin for the liquidated position is calculated. In isolated mode, forfeitable margin equals the position’s isolated margin balance after the fill (before forfeit). In cross-margin, forfeitable margin equals the display margin allocated to this position (maintenance-margin-weighted) capped by the account’s equity after the close. Forfeit per event is forfeit_amount = forfeitable_margin. Payout split is liquidator_reward = share_to_liquidator × forfeit_amount and insurance_cut = (1 − share_to_liquidator) × forfeit_amount. Each liquidation step consumes position margin (forfeit) and reduces mm_total. The account’s equity − mm_total strictly improves. If still unhealthy, another tx follows.

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Backstop Liquidations

If the standard order book cannot provide enough liquidity at bankruptcy-or-better prices to restore solvency, the system escalates to a backstop liquidation. Liquidation is executed position-level (one leg per tx, no taker fee). Orders route to the backstop book, where vaults or market makers provide liquidity. Execution price is the actual fill price on the backstop book. Partials fills are allowed if at least min_fill_ratio (admin-set) of the order size is filled. Otherwise revert (dust guard). Any remainder stays open until more backstop liquidity arrives or the system escalates further. After the close executes, the margin allocated to the liquidated position is fully forfeited. In isolated mode, forfeitable margin equals the position’s isolated margin balance after the fill. In cross-margin, forfeitable margin equals the display margin allocated to this position (maintenance-margin-weighted). Forfeit amount is forfeit_amount = forfeitable_margin. Payout split is liquidator_reward = share_to_liquidator × forfeit_amount and insurance_cut = (1 − share_to_liquidator) × forfeit_amount. Each backstop step reduces exposure and consumes the margin of the closed position. Account equity is recomputed after every step and compared to the updated total maintenance margin. If the account remains below its maintenance requirement, further liquidation steps follow until it is restored to health or fully closed.

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Keeper Incentives

Coming soon.