Margin Trading

Margin Trading Liquidation Fee

Last updated: 03/05/2026
Definition of Margin Trading Liquidation Fee 
 
A Margin Trading Liquidation Fee is a charge deducted from a user's account by the system during the processing of a margin trading liquidation order. This fee is designed to cover the additional costs arising from market volatility (such as slippage costs when handling large positions) and potential shortfall losses. 
 
In simpler terms, when your position is taken over by the liquidation engine, the market depth may be insufficient for the system to execute trades at ideal prices. The trading liquidation fee aims to compensate for this "wear and tear," ensuring the Insurance Fund is better equipped to protect the overall market.
 
Why is a Margin Trading Liquidation Fee Charged?
 
The primary purposes of the margin trading liquidation fee include: 
 
  • Covering Slippage Costs: After a user triggers liquidation and the liquidation engine takes over, the actual average execution price may be worse than the liquidation price. The resulting difference is covered by the liquidation fee. 
 
  • Contributing to the Insurance Fund: The liquidation fee is injected into the Insurance Fund account. The Insurance Fund is primarily used to withstand potential shortfall losses under extreme market conditions, protecting the common interests of all users.
 
How the Margin Trading Liquidation Fee is Charged
 
When liquidation is triggered (Debt Ratio ≥ 95%), the system first offsets assets and liabilities, retaining only net assets and net liabilities. It then calculates the value of the corresponding assets and the fee value based on the net liability value, followed by calculating the required quantity of assets. 
 
During this process, the liquidation fee is charged according to the respective coin's liquidation fee rate and disposal sequence. Finally, the system deducts the corresponding quantity of assets. If the asset value is sufficient to cover the liability + fee value, only the required amount is deducted. If it is insufficient, all assets will be taken.
 
Note: Both assets and liabilities incur Margin Trading liquidation fees. For specific Margin Trading liquidation fee rates, please refer to: [Margin Trading Liquidation Fee Table] 
 
 
Calculation of the Margin Trading Liquidation Fee 
 
Formulas 
 
 
  • Liability Coin Liquidation Fee Value = Liability Coin Value * Coin Liquidation Fee Rate 
 
  • Asset Coin Liquidation Fee Value = Asset Coin Value * Coin Liquidation Fee Rate 
 
  • Total Liability Liquidation Fee Value = Σ (Liquidation Fee Value of All Liability Coins) 
 
  • Total Asset Liquidation Fee Value = Σ (Liquidation Fee Value of All Asset Coins) 
 
The system then calculates the quantity of assets to be taken based on the total required asset value and the asset disposal sequence. 
 
  • If the asset value is sufficient to cover the liability + fee value, only the required amount is deducted. 
  • If it is insufficient, all assets will be taken.

 

Calculation Examples (Data for reference only)

 Scenario 1: No Shortfall, Assets Sufficient to Cover Liability and Liquidation Fees 

  • Assets: 30 BTC, 970 ETH | Price: BTC 100 USDT, ETH 10 USDT |   
  • Total Asset Value: 12700 USDT Liabilities: 12000 XRP | Price: XRP 1 USDT |  Total Liability Value: 12000 USDT
  • Assets used to repay liabilities, taken in descending order of disposal priority: 30 BTC, 900 ETH 
    • BTC asset liquidation fee: 30 * 100 * 2.5% = 75 USDT 
    • ETH asset liquidation fee: 900 * 10 * 2.5% = 225 USDT 
    • XRP liability liquidation fee: 12000 * 1 * 3% = 360 USDT 
    • Total required liquidation fee: 660 USDT. 
    • Additional ETH convertible at this point. 
    • Additional ETH required: 660 / 10 = 66 Total assets required: 30 BTC, 966 ETH Remaining in account: 4 ETH

 

Scenario 2: No Shortfall, Assets Sufficient to Cover Liability but Insufficient for Liquidation Fees  

  • Assets: 30 BTC, 920 ETH | Price: BTC 100 USDT, ETH 10 USDT | 
  • Total Asset Value: 12200 USDT Liabilities: 12000 XRP | Price: XRP 1 USDT | Total Liability Value: 12000 USDT 
  • Assets used to repay liabilities, taken in descending order of disposal priority: 30 BTC, 900 ETH 
    • BTC asset liquidation fee: 30 * 100 * 2.5% = 75 USDT
    • ETH asset liquidation fee: 900 * 10 * 2.5% = 225 USDT
    • XRP liability liquidation fee: 12000 * 1 * 3% = 360 USDT
    • Total required liquidation fee: 660 USDT.
    • Additional convertible ETH value at this point is only 200 USDT. 
    • All assets taken: 30 BTC, 920 ETH No assets remaining in account. 

 

Scenario 3: Shortfall, Assets Insufficient to Cover Liability and Liquidation Fees 

  • Assets: 30 BTC, 890 ETH | Price: BTC 100 USDT, ETH 10 USDT | 
  • Total Asset Value: 11900 USDT Liabilities: 12000 XRP | Price: XRP 1 USDT | Total Liability Value: 12000 USDT
    • Assets used to repay liabilities, taken in descending order of disposal priority: 30 BTC, 890 ETH
  • Due to the shortfall, no disposal fees are calculated.
  • All assets taken: 30 BTC, 890 ETH No assets remaining in account.