How Does an Exchange Profit from Liquidations? ⎊ Path

How Does an Exchange Profit from Liquidations?

An exchange profits from liquidations primarily through charging a liquidation fee, which is a percentage of the liquidated position's value. This fee is often split, with a portion going to the insurance fund and the remainder kept by the exchange as revenue.

They also profit from the trading fees generated when the liquidation order is executed on the market.

How Can a Trader Find out the Specific Liquidation Fee Percentage on a Given Exchange?

What Is the Difference between a Liquidation Fee and a Trading Fee?

What Is the Difference between Expected Price, Executed Price, and Market Price in a Trade?

What Is the Concept of ‘Exchange Token Burn’ Related to Profits?

What Are the Fees Associated with a Liquidation Event?

In the Limit Order Analogy, What Happens When the Price Moves past the Upper Bound?

In a CLMM, How Can an LP’s Fee Earnings Be Lower than the Divergence Loss?

How Do Cryptocurrency Mining Pools Increase the Chances of Earning Block Rewards?

Glossar

Profits from Liquidations

Mechanism ⎊ Profits from liquidations arise when a leveraged trading position in cryptocurrency or derivatives falls below its maintenance margin requirement.