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Tiered Leverage Function on Isolated Margin

2020-07-02 09:52

1. Introduction

Using Tiered Leverage, the system automatically adjusts the maximum leverage based on the user’s borrowed fund amount. This means that the leverage for an Isolated trading pair is dynamic. So, the corresponding initial risk ratio and liquidation risk ratio will vary. With Tiered Leverage, there are 10 tiers for 10x Isolated Margin and 5 tiers for 5x and 3x.

2. Tiered Leverage Risk Parameters

  • 10-level tiered leverage supports up to 10x leverage on Isolated Trading pairs:
Tier
Liquidation Risk Ratio
Margin Call Ratio
Initial Risk Ratio
Maximum Leverage
1
1.050
1.090
1.111
10
2
1.061
1.101
1.127
8.90
3
1.072
1.112
1.142
8.04
4
1.083
1.123
1.157
7.35
5
1.094
1.134
1.173
6.79
6
1.106
1.146
1.188
6.31
7
1.117
1.157
1.204
5.91
8
1.128
1.168
1.219
5.56
9
1.139
1.179
1.235
5.26
10
1.150
1.190
1.250
5
  • 5-level tiered leverage supports up to 5x leverage on Isolated Trading pairs:
Tier
Liquidation Risk Ratio
Margin Call Ratio
Initial Risk Ratio
Maximum Leverage
1
1.150
1.190
1.250
5
2
1.158
1.198
1.313
4.20
3
1.165
1.205
1.375
3.67
4
1.173
1.213
1.438
3.29
5
1.180
1.220
1.500
3
  • 5-level tiered leverage supports up to 3x leverage on Isolated Trading pairs:
Tier
Liquidation Risk Ratio
Margin Call Ratio
Initial Risk Ratio
Maximum Leverage
1
1.18
1.22
1.5
3
2
1.1975
1.24
1.875
2.14
3
1.215
1.26
2.25
1.8
4
1.2325
1.28
2.625
1.61
5
1.25
1.3
3
1.5

3. Borrowing Impact

  • The greater the amount of funds borrowed, the higher the tiered leverage level; the lower the maximum leverage level, the higher the initial and liquidation ratios.
  • The smaller the amount of funds borrowed, the lower the tiered leverage level; the higher the maximum leverage level, and the lower the initial and liquidation ratios.
  • If the user simultaneously borrows the base currency and the quote currency, the system calculates the new levels separately and the tier will be determined based on whichever is higher.
Using BTC/USDT as an example, the Tiered Leverage are shown in the following table:
Tier
Maximum Base
Maximum Quote
Liquidation Risk Ratio
Maximum Leverage
1
9
70,000
1.050
10
2
18
140,000
1.061
8.90
3
27
210,000
1.072
8.04
4
36
280,000
1.083
7.35
5
45
350,000
1.094
6.79
6
54
420,000
1.106
6.31
7
63
490,000
1.117
5.91
8
72
560,000
1.128
5.56
9
81
630,000
1.139
5.26
10
90
700,000
1.150
5
  • For more details about other trading pairs, please refer to Isolated Margin Tiered Data.
  • Assuming the user borrowed 15 BTC and 250,000 USDT on Isolated Margin:
    • If the tier is 4: The borrowed BTC tier is 2 and the borrowed USDT tier is 4. The higher tier is used, which would be tier 4;
    • The maximum leverage is 7.35 and the corresponding liquidation risk ratio is 1.083;
  • Borrowing for VIP users and sub-accounts
    • For VIP users and sub-accounts, the system will automatically match the corresponding tiered leverage level based on the amount borrowed.

4. Tiered Liquidation

Tiered liquidation is subjected to tiered leverage in the Isolated Margin. Users’ positions will be partially liquidated to match the next tiered leverage if it was under liquidation risk.
  • If the tier ≥ 2, and the risk ratio reaches the liquidation risk ratio, the system will automatically calculate the amount for the tiered liquidation and reduce the position size to the next tier or onward until the risk ratio meets the required level.
  • Tiered liquidation is carried out in stages, whereby the liquidation engine gradually reduces the positions and calculates the debt to be repaid. If at the next tier the risk ratio is still below the liquidation risk level, partial liquidation will continue until the risk ratio meets the required level.
  • In extreme cases, all positions will be liquidated.
Example: Suppose a user borrows 250,000 USDT in the BTCUSDT Isolated Margin account. The maximum leverage rate is 7.35, and the corresponding liquidation risk ratio is 1.083.
  • Due to market fluctuations, the price of BTC falls, and the user risk ratio is now below 1.083, with the partial liquidation being triggered to repay a debt of 50,000 USDT. The position drops to tier 3, the maximum leverage now 8.04, and the corresponding liquidation risk ratio is now at 1.072;
  • If the BTC price continues to fall with the risk ratio still below 1.072, the system will continue to perform a gradual liquidation to repay the debt of 80,000 USDT.
By the time the market is stabilized, the user has gone through two rounds of tiered liquidation, and the debt has now become 120,000 USDT. Upon recalculation, the risk ratio is 1.11 (hypothetically) which corresponds to tier 2, with the maximum leverage being 8.90, and the liquidation risk ratio being 1.061.

5. How to Use Tiered Leverage

  • The maximum leverage for Isolated Margin can be found here:
  • Tier information can be found on the Borrow/Repay pop-up when you borrow
  • Isolated margin tiered data can be found here: