Liquidations
Accounts can be margin called and liquidated.
Collateral requirement
The amount of collateral needed to maintain an option open depends on the pool utilization at the time it was minted.
Margin Calls
A position will be margin called if
Total value of collateral / collateral requirement <= 100%
Liquidations Process
| collateralization (%) | <50 | 50 | 60 | 70 | 80 | 90 | 100 | 110 | 120 | 130 | 140 | 150 | ... |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| liquidation bonus (%) | 100 | 100 | 86 | 71 | 57 | 43 | 28 | 14 | 0 | -14 | -28 | -43 | ... |
Forced Exercise
| distance from strike (minTickSpacing) | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | >10 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| cost (bps) | 1024 | 512 | 256 | 128 | 64 | 32 | 16 | 8 | 4 | 2 | 1 | 1 |