Contract Trading — Explanation of Leverage Tiers

Nodexx perpetual contracts use leverage tiers for all trading accounts to reduce the likelihood of massive forced liquidations.

If some investors hold very large positions, they pose risks to other investors. If their positions are forcibly liquidated, other investors may experience automatic position reductions. The incremental leverage tier model helps prevent this by increasing the margin requirements for large positions.

Leverage tiers require higher margin levels for larger positions.

When positions are large, triggering forced liquidation may carry the risk of unsafe liquidation, which could impact the market. Nodexx’s liquidation engine can use additional margin to effectively liquidate large positions.

If a forced liquidation is triggered, Nodexx will cancel all unfilled orders for that contract to release margin and maintain the position. Orders for other contracts are not affected.

Nodexx uses a partial liquidation method to liquidate positions step-by-step. This method automatically attempts to reduce the maintenance margin requirement to avoid liquidating the entire position.

 

Each contract has a base leverage limit and an increment. These parameters, combined with base maintenance and initial margin requirements, are used to calculate the full margin requirement for each position.

As the position size increases, maintenance margin and initial margin requirements also increase. The margin rate will rise or fall according to changes in leverage tiers.

 

Nodexx currently supports users modifying different leverage multiples for both long and short positions. Users can adjust from isolated margin leverage to any leverage multiple. After modification, success will depend on whether it meets the allowed maximum leverage tier.

Nodexx uses a partial liquidation method to liquidate positions step-by-step. This method automatically attempts to reduce the maintenance margin requirement to avoid liquidating the entire position.

Users using the lowest leverage tier

Nodexx will cancel all unfilled orders for this contract. If maintenance margin requirements are still not met, the position will be taken over by the liquidation engine at the bankruptcy price.

 

The liquidation engine will attempt to reduce the user’s leverage tier to lower margin requirements by the following methods:

Cancel unfilled orders but retain existing positions while lowering the user’s leverage tier.

If the position remains in a forced liquidation state, the entire position will be taken over by the liquidation engine at the bankruptcy price.