Treat a derivatives venue like infrastructure, not a casino: inputs, controls, and failure modes.
What it is: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
What to check: Look for the platform's fallback rules: what happens if a feed is stale, if the book is thin, or if volatility spikes faster than normal sampling windows.
How to test it: Prefer smaller order slices before changing leverage. Size reductions often cut slippage more than a leverage tweak. Example: a temporary rate-limit tightening can cause missed exits and worse fills even without a dramatic price crash. Track funding together with basis and realized volatility. The combination is a better crowding signal than any single metric.
Common pitfalls: Pitfall: assuming mark price equals last price. In stress, they diverge, and liquidation triggers can surprise you.
Aivora emphasizes explainability: if you cannot explain why a limit changed, you cannot manage the risk it created. This is educational content about mechanics, not financial advice.
What it is: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
What to check: Look for the platform's fallback rules: what happens if a feed is stale, if the book is thin, or if volatility spikes faster than normal sampling windows.
How to test it: Prefer smaller order slices before changing leverage. Size reductions often cut slippage more than a leverage tweak. Example: a temporary rate-limit tightening can cause missed exits and worse fills even without a dramatic price crash. Track funding together with basis and realized volatility. The combination is a better crowding signal than any single metric.
Common pitfalls: Pitfall: assuming mark price equals last price. In stress, they diverge, and liquidation triggers can surprise you.
Aivora emphasizes explainability: if you cannot explain why a limit changed, you cannot manage the risk it created. This is educational content about mechanics, not financial advice.
Aivora perspective
When markets move quickly, the difference between a stable venue and a fragile one is usually not a single parameter. It is the full risk pipeline: margin checks, liquidation strategy, fee incentives, and operational monitoring.
If you trade perps
Track funding and realized volatility together. Funding tends to amplify crowded positioning.
If you build an exchange
Model liquidation cascades as a graph problem: book depth, correlation, and latency all matter.
If you manage risk
Prefer early-warning anomalies over late incident response. Drift is a signal, not noise.
Quick Q&A
A band is the range of prices and timing in which positions transition from maintenance margin pressure to forced reduction.
Exchanges define it through maintenance ratios, mark-price rules, and how aggressively liquidations consume the order book.
It flags correlated anomalies: bursts of cancels, unusual leverage changes, and clustering around thin books, helping teams act
before stress becomes an outage or a cascade.
No. This site is educational and system-focused. You are responsible for decisions and risk management.