Skip to main content

Why Do Crypto Exchanges Prefer Automatic Liquidation over Margin Calls?

Crypto markets operate 24/7 with extreme volatility, making manual or delayed responses like traditional margin calls impractical. Automatic liquidation is a swift, automated risk management tool.

It ensures that positions are closed immediately upon breaching the maintenance margin, minimizing the chance of the account balance becoming negative and requiring the insurance fund.

How Can a High Transaction Fee Burn Impact Network Usage?
Why Are Perpetual Futures Liquidation Profits Often Directed into the Insurance Fund?
Which Futures Exchanges Typically Use the Socialized Loss Model?
How Does the Size of the Insurance Fund Relate to the Exchange’s Maximum Allowable Leverage?