What Is the Difference between ‘Soft Liquidation’ and ‘Hard Liquidation’?
Soft liquidation is a risk management approach where an exchange attempts to reduce the size of a position gradually or automatically reduce the leverage before a full, forced closure. This may involve partial closing or margin tier adjustments.
Hard liquidation, or forced liquidation, is the full closure of the entire position once the maintenance margin is breached. Soft liquidation aims to give the trader a chance to avoid full closure and is less disruptive to the market.
Glossar
Leverage Management Techniques
Technique ⎊ Leverage Management Techniques encompass the systematic, quantitative methods employed by sophisticated traders to control the degree of financial exposure relative to their collateral in derivatives markets.
Cryptographic Hard Problems
Challenge ⎊ Cryptographic hard problems, within the context of cryptocurrency, options trading, and financial derivatives, represent computational tasks demonstrably resistant to efficient solution by known algorithms.
Emergency Hard Fork Protocol
Protocol ⎊ An emergency hard fork protocol outlines the specific steps required to execute a non-consensual change to a blockchain's ruleset in response to an immediate threat.
Hard Rug Pull Definition
Definition ⎊ A hard rug pull, within cryptocurrency, options trading, and financial derivatives, denotes a malicious exit strategy where project developers or counterparties abruptly abandon a project or obligation, extracting substantial funds while leaving investors or traders with worthless assets or exposure.
Hard to Borrow Crypto
Characteristic ⎊ Hard to Borrow Crypto describes digital assets that are scarce in the lending markets, making it difficult or prohibitively expensive for short sellers to locate the necessary quantity to initiate or maintain a short position.
Ieo Hard Cap
Constraint ⎊ An Ieo hard cap represents a predetermined upper limit on the total token supply available during an Initial Exchange Offering, functioning as a critical parameter in tokenomics and directly influencing scarcity dynamics.
Hard Fork Contrast
Compatibility ⎊ The hard fork contrast is defined by its fundamental lack of backward compatibility with the previous protocol version, necessitating that all network nodes upgrade their software to continue validating transactions on the new chain.
Soft Fork versus Hard Fork
Distinction ⎊ A soft fork is a backward-compatible protocol upgrade requiring only a majority of miners to enforce new rules, whereas a hard fork mandates that all nodes upgrade to a new, incompatible rule set, potentially splitting the chain.
Soft Fork Changes
Upgrade ⎊ A Soft Fork Change represents a non-disruptive protocol upgrade that introduces new transaction rules or features while maintaining backward compatibility with older versions of the software.
Margin Call Procedures
Margin Enforcement ⎊ Margin Call Procedures are the standardized, often automated, steps triggered when a trader's collateral equity falls below the required maintenance margin level for their leveraged derivative positions, demanding immediate posting of additional capital.