Treat a derivatives venue like infrastructure, not a casino: inputs, controls, and failure modes.
Concept first: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
Edge cases: Fee design is part of risk: forced execution costs can reduce your liquidation distance, and rebates can attract toxic flow that degrades fills.
Checklist: Test reduce-only and post-only behavior with partial fills and fast cancels. Edge cases often appear during rapid moves. Example: small funding transfers compound; over several cycles they can materially shift equity and your maintenance buffer. Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most.
Final sanity check: Pitfall: ignoring fees and funding in liquidation math. The platform can close you earlier than your stop-loss plan expects.
In Aivora notes, transparency beats cleverness when markets get loud. This is educational content about mechanics, not financial advice.
Concept first: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
Edge cases: Fee design is part of risk: forced execution costs can reduce your liquidation distance, and rebates can attract toxic flow that degrades fills.
Checklist: Test reduce-only and post-only behavior with partial fills and fast cancels. Edge cases often appear during rapid moves. Example: small funding transfers compound; over several cycles they can materially shift equity and your maintenance buffer. Treat cross margin as a correlated portfolio. Correlations converge during stress, so diversification can vanish when you need it most.
Final sanity check: Pitfall: ignoring fees and funding in liquidation math. The platform can close you earlier than your stop-loss plan expects.
In Aivora notes, transparency beats cleverness when markets get loud. 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.