Liquidation

SoneFi implements a rigorous risk management process to help protect both the traders and the market makers, and ensure fairness for both parties. To understand how the liquidation process works, please first familiarize yourself with the terms below:

Initial Margin Requirements (IMR): The Initial Margin Requirement is the USD value of equity required to open a position or increase position size. Each market will have a parameter called “Initial Margin Fraction” (IMF), which is a percentage of position size to be treated as IMR for that position. The IMR is displayed in USD.

Initial Margin Fraction (IMF): The Initial Margin Fraction is a parameter set by SoneFi, and is used to determine the initial margin requirement. It is displayed as a percentage & different asset classes will have different IMF.

Maintenance Margin Requirements (MMR): The Maintenance Margin Requirement is the USD value of equity required to maintain the position before it is liquidated by the platform. Each market will have a parameter called “Maintenance Margin Fraction” (IMF), which is a percentage of position size to be treated as MMR for that position. The MMR is displayed in USD.

Maintenance Margin Fraction (MMF): The Maintenance Margin Fraction is a parameter set by SoneFi, and is used to determine the Maintenance Margin Requirement. It is displayed as a percentage & similar to IMF, the MMF will be different for different asset classes.

Equity Value: The Equity Value is the net value of your account. It is the summation of unrealized profits/losses, unrealized fees (funding/borrowing/position opening/closing/liquidation), and collateral value.

Collateral Value: The Collateral Value is calculated based on the collateral assets and their respective market prices multiplied by the collateral asset LTV.