KoinlyticsLeverage lets you control a position bigger than your capital. When the position moves against you far enough that your margin cannot cover it, a liquidation engine closes your position to protect the exchange (or, for DeFi, the protocol) from taking your losses.
The two liquidation types
- CEX perp liquidation. Your margin drops below maintenance margin. The exchange's engine closes your position at market. If close price is worse than bankruptcy price, the insurance fund covers the gap.
- DeFi liquidation. Your health factor drops below 1. Anyone can call the liquidation function, repay part of your debt, and receive your collateral at a discount (5-10%).
Why cascades happen
Traders on the same side (mostly long) with similar leverage get liquidated at similar price levels. Each forced sell pushes price lower, triggering the next batch. Order-book depth vanishes because market-makers pull. Price gaps down 10-30% in seconds. The record hourly liquidation on record: over $1B in October 2021.
Sizing to survive
- Use liquidation calculators. Every exchange shows liq price.
- Keep leverage under 3x for spot-like positioning.
- Add stop-loss before liquidation, not at it.
- Diversify collateral, not just position.
- Never hold size through major macro events (FOMC, CPI) at high leverage.
Try it
Below is a live liquidation-price calculator. Set your collateral, borrow, and liquidation threshold to see how close you are to danger under different assumptions.