The Liquidation Reserve on EQONEX is operated by a separate entity, the Liquidation Reserve Manager, that is dedicated to managing liquidation risk for EQONEX. Other exchanges may refer to this as the Insurance Fund. The Liquidation Reserve Manager sends quotes for liquidations into the Liquidation Platform along with other market makers designated to participate in this process. Unlike on some other exchanges, however, it cannot see positions on EQONEX and therefore has no additional information to other participants in the liquidation process.
The purpose of the Liquidation Reserve is to reduce the likelihood of ADL such that gains for profitable traders can be paid in full. Generally, the Liquidation Reserve (and Insurance Funds on other platforms) grow through the liquidation fees that are charged to traders upon liquidation of their position. Some platforms may also pay any margin balances remaining after liquidation into their insurance fund. On EQONEX, any remaining margin balance after liquidation stays in the trader’s account. To ensure the Liquidation Reserve grows sufficiently especially whilst EQONEX’s volumes are still growing, EQONEX will contribute a percentage of the regular trading fees to the Liquidation Reserve. Our aim is to always balance the Liquidation Reserve with the risk on the platform.
The Liquidation Reserve is currently over 4% of EQONEX current average daily volumes across Perpetual products.
For further assistance or more information, please contact our Customer Support team via firstname.lastname@example.org or click on the chat widget at the bottom right-hand side of the EQONEX page.