Liquidation Approach
GRVT’s smart contract uses audited logic and external 3rd party price feeds to decide which accounts can be liquidated.
The GRVT trading system can liquidate a client account only if the smart contract allowed it, ensuring security of client's funds and preventing an unauthorized liquidations.
Currently GRVT liquidates client accounts fully, transferring all funds and positions to GRVT Insurance Fund (see https://help.grvt.io/en/articles/10255131-what-is-the-grvt-s-insurance-fund).
Liquidation happens when a client's Account Equity falls below Maintenance Margin Requirements.
* Account Equity is calculated as the sum client's funds (USDT balance) + sum of Unrealized PnL on all account positions.
Bankruptcy price
Liquidation orders are filled at the position's Bankruptcy Price, a hypothetical price at which the account's losses equal the equity remaining in the account at the time of the liquidation. In other words, Bankruptcy prices are calculated for the purpose of leaving the trading account with zero Equity and, zero USDT balance.
For more details about the calculation formula for the Bankruptcy Price, see the PDF attached to this page ( Liquidation_Limit_Price_Calculation.pdf )
Liquidation for Cross Margin positions
GRVT Risk system computes the following on a regular basis:
Account Equity:
Represent the value of the account if all open positions were closed at current Mark Prices of their instruments.
Is calculated as: Balance of USDT + sum of Unrealized PnL on all open positions.
Account Maintenance Margin Requirements:
Represent the minimal Account Equity that ensures account's solvency.
Is calculated as a sum of
Maintenance Margin requirementsfor each open position of the account.See Maintenance Margin Rates table for details of how it is calculated: https://help.grvt.io/en/articles/10255049-what-are-the-margin-requirements-on-grvt
When Account Equity falls below Account Maintenance Margin Requirements the client account is liquidated.