Some platforms adopt the system of “sharing through positions”. When the market fluctuates greatly and users can’t trade according to the liquidation price after the liquidation, the loss range is greater than the margin, and the user whose risk reserve is insufficient will be given priority to users who make profit from the contract. In accordance with the proportion of profit, deduct the corresponding proportion of coins for profitable users.
This system has many unreasonable points, and Coinidc adopts an automatic lightening system.
1. What is the automatic reduction mechanism?
When a user is forced to close a position, the remaining position of the user will be taken over by the system.
If the forced liquidation position fails to be liquidated at the liquidation price in the market, and the insurance fund is insufficient to cover the loss, the system will trigger the automatic lightening mechanism. The automatic lightening system will lighten up users who hold positions in the opposite direction (profit). The order of lightening positions will be determined according to leverage and profitability.
2. What is the difference between the automatic lightening mechanism and the allocation mechanism?
The apportionment mechanism is to apportion the loss in proportion to each profitable account. This mechanism is to transfer part of the user's profit after settlement to share the loss, so the profit cannot be transferred out before settlement.
Auto-Deleveraging is the process of Auto-Deleveraging so that users with high profits and leverage share the risk. This mechanism allocates risks by closing positions, so profits can be transferred out at any time.