Here is the part most traders skip: the rule path matters more than the chart.
What it is: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk. ADL typically appears only after the insurance buffer is stressed. Look for disclosure and predictable ranking rules.
What to check: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits.
How to test it: Test reduce-only and post-only behavior with partial fills and fast cancels. Edge cases often appear during rapid moves. Example: doubling size in a thin book can more than double slippage because depth is not linear near top levels. Run a small-size rehearsal when liquidity is thin. Observe how stop orders trigger and how mark/last prices diverge around spikes.
Common pitfalls: Pitfall: assuming mark price equals last price. In stress, they diverge, and liquidation triggers can surprise you.
In Aivora notes, transparency beats cleverness when markets get loud. 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. ADL typically appears only after the insurance buffer is stressed. Look for disclosure and predictable ranking rules.
What to check: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits.
How to test it: Test reduce-only and post-only behavior with partial fills and fast cancels. Edge cases often appear during rapid moves. Example: doubling size in a thin book can more than double slippage because depth is not linear near top levels. Run a small-size rehearsal when liquidity is thin. Observe how stop orders trigger and how mark/last prices diverge around spikes.
Common pitfalls: Pitfall: assuming mark price equals last price. In stress, they diverge, and liquidation triggers can surprise you.
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.