Liquidation

Once a trade reaches the liquidation price, the liquidation engine marks the position as liquidate-able (onchain) and liquidators attempt to close the positions. As per protocol design, liquidations incur no price impact, thereby minimizing potential losses.

Liquidations incur a fixed fee that is always slightly above gas fees in order to incentivize liquidators closing overextended positions. At a future stage, additional incentives may be introduced to attract external liquidators and increase the robustness of the liquidation engine.