Ликвидация

Liquidation is the automatic forced closing of a position or sale of collateral by a platform when a trader's or borrower's own collateral is no longer sufficient to cover the risk. The purpose of the mechanism is to keep losses from exceeding the collateral and to protect the lender or the exchange.

## How it works

In leveraged trading, a trader deposits margin (collateral) and opens a position larger than their capital. The exchange calculates the margin ratio and the liquidation level. When the price moves against the position and the remaining margin drops to the maintenance margin threshold, the system closes the position at market price. The exchange's insurance fund often adds a buffer that covers the difference if the price moves too fast.

## In DeFi lending

In lending protocols, a borrower leaves a crypto asset as collateral. If its market value falls relative to the amount of the debt, any network participant can repay part of the debt and receive the collateral at a discount (liquidation bonus). The mechanism is fully algorithmic and does not depend on a human decision.

## Why it matters for practitioners

Liquidations amplify volatility. Mass position closures push the price further, triggering a new wave of closures (a cascade). Therefore, when working with crypto fintech or partner products, it is important to understand the thresholds and behavior of a specific platform, not just the nominal leverage.

## Common mistakes

Typical errors include: assuming leverage is 'safe' just because it is below the maximum; ignoring fees and slippage when closing a position; forgetting that in low liquidity the liquidation price can execute much worse than calculated. It is also important to read the rules of the specific exchange or protocol, since formulas and bonuses differ.