JuCoin's perpetual futures use leverage tiering for all trading accounts to reduce the likelihood of massive forced liquidations.
If some investors hold large positions, they pose risks to other investors. If their positions are liquidated, other investors may experience auto-deleveraging events. The incremental leverage tiering model helps prevent such situations by increasing the margin requirements for large positions.
Leverage tiering requires higher margin levels for larger positions.
When positions are large, triggering liquidation may pose risks of unsafe liquidation, potentially impacting the market. JuCoin's liquidation engine can use more margin to effectively liquidate large positions.
If liquidation is triggered, JuCoin will cancel all open orders for the contract to release margin and maintain the position. Orders for other contracts are unaffected.
JuCoin uses a partial liquidation method to gradually close positions, which automatically attempts to reduce maintenance margin requirements and avoid full-position liquidation.
Dynamic Leverage Tiering
Each contract has a base leverage limit and an incremental amount. These parameters, combined with the base maintenance and initial margin requirements, are used to calculate the complete margin requirements for each position.
As the position size increases, the maintenance margin and initial margin requirements also increase. The margin rate will rise or fall with changes in leverage tiering.
Modifying Leverage
JuCoin currently supports users in modifying different leverage multiples for both long and short positions. Users can adjust any leverage multiple under the isolated margin mode, and the success of the modification depends on the maximum allowed leverage tier.
JuCoin uses a partial liquidation method to gradually close positions, which automatically attempts to reduce maintenance margin requirements and avoid full-position liquidation.
For users at the lowest leverage tier:
JuCoin will cancel all open orders for the contract. If the maintenance margin requirement is still not met, the position will be taken over by the liquidation engine at the bankruptcy price.
For users at higher leverage tiers:
The liquidation engine will attempt to reduce the user's leverage tier, thereby lowering the margin requirements, through the following methods:
Cancel open orders while retaining the existing position, thereby reducing the user's leverage tier.
If the position remains in a liquidation state, the entire position will be taken over by the liquidation engine at the bankruptcy price.