Liquidation

Liquidation is the automatic, forced closure of a leveraged position (or a borrow position in a lending market) once your posted collateral falls below the platform’s required maintenance threshold relative to the position’s size. It’s not optional and it’s not something you can negotiate in the moment — once the trigger condition is met, the platform’s contracts (or a designated liquidator) close the position automatically, usually with an additional penalty on top of the underlying loss.

On a leveraged perpetuals position, liquidation is the direct consequence of using leverage at all: the higher the leverage, the smaller the adverse price move needed to erase your collateral and trigger it. On a lending market, liquidation happens when borrowed collateral’s value drops relative to what you’ve borrowed against it, independent of whether you’re using a perps platform at all. Both mechanisms exist for the same reason — protecting the platform (and other users) from a position that can no longer cover what it owes — but the specific trigger price, penalty size, and whether partial liquidation is possible vary by platform and are worth checking directly before opening any leveraged or borrowed position.

See our lending risk and liquidation guide for the full mechanics, and our Perpetuals category page for how this applies specifically to leveraged perps trading across the platforms in our Perp DEX Rankings.