Liquidation

How it is used

Exchanges show a liquidation price for each leveraged position, and news reports add up total liquidations after sharp price moves. In DeFi lending, outside users called liquidators repay part of a risky loan and receive some of the collateral at a discount. People say a position or a trader got liquidated.

Example sentences

1. The price fell below my liquidation price, and the exchange closed the whole position.

2. The sudden drop caused more than 400 million dollars of liquidations in an hour.

Common collocations

• liquidation price
• forced liquidation
• face liquidation
• get liquidated
• liquidation threshold

Related terms

• leverageThe use of borrowed funds to open a trading position larger than your own money. It is shown as a ratio such as 10x and makes both gains and losses bigger.
• collateralAssets that a borrower locks up as security for a loan or a leveraged position. If the debt is not repaid or the collateral loses value, it can be sold to cover the loss.
• oracleA service that brings outside information, such as asset prices, sports results or weather data, onto a blockchain so that smart contracts can use it.
• volatilityHow much and how quickly a price moves up and down. Crypto prices are known for high volatility, with moves of 10 percent or more in a single day.
• liquidityHow easily an asset can be bought or sold quickly without moving its price much. In DeFi, it also means the funds that users deposit into pools so that others can trade.

More terms: Exchanges & Trading

• exchange
• market cap
• centralized exchange
• order book
• trading pair
• fiat
• spot trading
• slippage