How Is the Liquidation Price of a Perpetual Contract Calculated When Using a Stablecoin as Collateral?
The liquidation price is calculated as the price at which the trader's margin balance falls below the maintenance margin requirement. Since the collateral is a stablecoin, its value is assumed to be $1.
The calculation involves the initial margin, the contract's size, the maintenance margin rate, and the current mark price. The stable value of the collateral simplifies the equation, making the liquidation price solely dependent on the contract's price movement, rather than the fluctuating value of the collateral itself.
