What is the leverage gradient MMR system?

What is the tiered maintenance margin system?

The tiered maintenance margin system applies different maintenance margin requirements based on your position size.

As your position increases and moves into a higher tier:

• The required maintenance margin rate (MMR) increases.

• The maximum available leverage decreases.

Each tier has a minimum maintenance margin requirement to keep the position open. If your maintenance margin ratio falls below the required level, liquidation may be triggered.

How does liquidation work in different margin modes?

Isolated margin mode

When the maintenance margin ratio of your position is ≤300%, the system will issue a warning to reduce your position, and you should be aware of the risk of liquidation. The 300% is a warning parameter, and OKX reserves the right to adjust this parameter based on actual conditions. When the maintenance margin ratio of your position is ≤100%, it will trigger a forced liquidation, removing your open orders in opposite directions. Some or all of your position with isolated margin will be transferred to the liquidation engine.

For example:

1. Example of reducing positions:

For the BTC/USDT leverage pair, when you hold a larger position in a long BTC margin, and your position tier is at 2 or higher (meaning the borrowed BTC quantity is >= 100, for example: 110), the liquidation engine won't immediately liquidate the your entire position if it detects that the current maintenance margin ratio is below 100%. Instead, it'll perform a forced partial reduction.

First, it calculates the quantity to reduce in order to lower the current position by one tier: current borrowed quantity - maximum borrowable quantity at tier 2 = 110 - 100 = 10.

When your position is at tier 1 and the maintenance margin ratio is below 100%, or when your position is at tier 2 or higher but the maintenance margin ratio calculated based on the minimum position tiers is still below 100%, the system will directly order all contracts of that position to the liquidation engine at the bankruptcy price (the price that wipes out all margin).

2. Example of maintenance margin ratio:

For the BTC/USDT leveraged pair, using USDT as margin for a short position, the you have an asset of 3,299,800 USDT, a liability of 110 BTC, an interest of 0.5 BTC, a mark price of 19,500, and a taker fee rate of 0.01%.

MMR = (liability + interest) * position tiers maintenance margin ratio * mark price = (110 + 0.5) * 4.00% * 19500 = 86190 USDT

Position reduction fee = (liability + interest) * (1 + position tiers maintenance margin ratio) * fee rate * mark price = (110 + 0.5) * (1 + 4.00%) * 0.01% * 19500 = 224.094 USDT

Maintenance margin ratio = [Position assets - (Liabilities + Interest) * mark price] / (MMR + Position reduction fee) = [3,299,800 - (110 + 0.5) * 19,500] /（86190+224.094）=1325.0732%

At this time, the account is secure. When the mark price rises to 29,000, MMR = (110 + 0.5) * 4.00% * 29000 = 128180 USDT

Position reduction fee = (110 + 0.5) * (1 + 4.00%) * 0.01% * 29000 = 333.268 USDT

Maintenance margin ratio = [3,299,800 - (110 + 0.5) * 29,000] /（128180+333.268）=74.1558%

If the maintenance margin ratio is less than 100%, you'll need to reduce their position. After reducing by one level (from level 3 to level 2, reducing by 10 quantity), if the maintenance margin ratio is still not above 100%, you'll continue to reduce their position. After reducing by another level (from level 2 to level 1, reducing by 50 quantity), if the maintenance margin ratio is above 100%, the reduction process will stop. If the maintenance margin ratio is still not above 100% after this reduction, and you're already at level 1, the system will automatically order all quantity of that position to the liquidation engine at the bankruptcy price (the price at which all margin is lost).

Cross margin mode under Futures mode

In this mode, forced liquidation is determined by whether the maintenance margin ratio reaches 100%. In the cross margin mode, the maintenance margin ratio is an indicator calculated based on the total account equity of a specific cryptocurrency and the MMR. Generally, the higher the account equity and the lower the MMR, the lower the risk.

When the maintenance margin ratio for a specific cryptocurrency in a cross margin position is less than or equal to 300%, the system will issue a warning to your account regarding the need to reduce your position. The 300% threshold is a warning parameter, and OKX reserves the right to adjust this parameter based on actual conditions. If the maintenance margin ratio for a specific cryptocurrency in a cross margin position falls to 100% or below, the system will cancel orders according to the following rules: it will cancel all unfilled orders for the current cryptocurrency in the cross margin (including strategy orders) and will cancel the same-direction open orders for isolated margin positions, but will not cancel isolated margin strategy orders. If, after the cancellations, the maintenance margin ratio remains at 100% or below, the account will trigger a forced liquidation.

Forced liquidation occurs in three stages. At each stage, the reduction in position is handed over to the liquidation engine at the current mark price, and the corresponding MMR for the reduced quantity is collected. The MMR is determined by the tier of the position you are reducing and will be used to cover any losses incurred by the liquidation engine. The remaining amount will be injected into the platform's risk reserve.

3. Cross margin mode under Multi-currency margin mode (Advanced mode)

In this mode, forced liquidation occurs when the maintenance margin ratio falls below 100%. When the cross margin maintenance margin ratio is less than or equal to 300%, the system will issue a liquidation warning to your account. You need to be aware of the liquidation risk.

300% is the warning parameter, and OKX reserves the right to adjust this parameter based on actual conditions. When the cross-currency cross margin maintenance margin ratio is less than or equal to 100%, the system will cancel the positions for you according to the following rules: it will reduce positions by canceling all un-filled positions in the current currency's cross margin (including bots positions) and will cancel all isolated margin open positions for regular positions, but will not cancel isolated margin bots positions. If, after the cancellation, the maintenance margin ratio remains less than or equal to 100%, the account will trigger a forced liquidation.

Forced liquidation occurs in three stages. At each stage, the reduction in position is handed over to the liquidation engine at the current mark price, and the corresponding MMR for the reduced quantity is collected. The MMR is determined by the tier of the position you are reducing and will be used to cover any losses incurred by the liquidation engine. The remaining amount will be injected into the platform's risk reserve.

You can view the maintenance margin ratio for each cryptocurrency position tiers at the bottom of the trading page.

On the app: Tap Trade twice > Select Spot > Select More(button) > Select Market info > Select Position tiers

On the web: Select Trade > Select Spot > Expand the sidebar(if it is hidden) > Select information(button) > Select Position tiers

For example, if you borrow 120 BTC in trading currency, they are in tier 5 (100-125). At the same time, if they borrow 10,000 USDT in quote currency, they are in tier 1 (0-500,000). The your current tier is determined by the higher of the two tiers, which is tier 5. The required maintenance margin ratio for this position tiers is 7%, allowing for a max leverage of 7.14 times.

If the maintenance margin ratio of a position falls below the required position tiers maintenance margin ratio of 7%, a liquidation will occur. The liquidation will use a gradient liquidation mechanism. When the position reaches the liquidation line, a partial reduction of the position will occur, and the remaining position will be retained.