How Does Auto-Exchange Work in the Multi-Assets Mode?
2022-07-06 06:56
Last updated: 3 Dec 2024
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What is Auto-Exchange?
Auto-Exchange is a mechanism to ensure that the Asset Wallet Balances in the USDⓈ-M Futures Wallet do not fall below a certain threshold.
When Auto-Exchange is triggered, all positive balance assets under the USDⓈ-M Futures Wallet are automatically and proportionally converted at market price by the Auto-Exchange service engine to cover the corresponding Asset Wallet Balance deficit.
For Regular and VIP 1 Users, Auto-Exchange Threshold will be -5,000 USDT, -5,000 USDC, -5,000 BNFCR or -0.1 BTC. For all other users, the Auto-Exchange Threshold will be -10,000 USDT, -10,000 USDC, -5,000 BNFCR or -0.1 BTC.
When will Auto-Exchange be triggered in the Multi-Assets Mode?
1. When the user’s Asset Wallet Balance is lower than the Auto-Exchange Threshold, the Auto-Exchange service engine will proportionally convert other assets in the USDⓈ-M Futures Wallet to cover the deficit.
For Regular and VIP 1 Users, when Asset Wallet Balance is less than Auto-Exchange Threshold (-5,000 USDT/USDC/BNFCR or -0.1 BTC). For all other users, when Asset Wallet Balance is less than Auto-Exchange Threshold (-10,000 USDT/USDC or -5,000 BNFCR or -0.1 BTC).
2. In the case of liquidation, Auto-Exchange will be immediately triggered if the Asset Wallet Balance in the USDⓈ-M Futures Wallet is insufficient to cover the deficit.
3. When there is a negative balance in User’s USDⓈ-M Futures Wallet with no existing positions or open orders, the system will continuously calculate the LTV (Loan-To-Value) ratio and trigger Auto-Exchange when LTV ≥ 0.995.
Note: LTV = abs(∑negative asset WalletBalance in USD value * (1 + Auto-Exchange Haircut)) / ∑positive asset WalletBalance in USD value * (1 - Auto-Exchange Haircut)
Using a Regular or VIP 1 User with positive BTC and negative USDC balance for example,
When the user’s USDC balance hits -5,000 USDC, Auto-Exchange will be triggered. 5,000 USDC / 97.5% = 5,128.20 USDC of user’s BTC will be converted to USDC to balance the wallet.
Do note that while Auto-Exchange doesn’t charge any fees, there are haircut rates (also referred to as the collateral rate) that will be applied to the Auto-Exchanged assets to mitigate the liquidity risks.
In the event there are multiple assets under Multi-Asset Mode, when the Auto-Exchange is triggered, they will be automatically converted to negative assets according to the proportion of each asset. In order to avoid the loss of Automatic-Exchange, users can transfer or exchange independently before reaching the Automatic-Exchange threshold.
Auto-Exchange can help balance your account and increase the utilization rate of funds in case of losses.
What are the Auto-Exchange haircut rates?
While Auto-Exchange doesn’t charge any fees, the following haircut rates (also referred to as the collateral rate) apply to the Auto-Exchanged assets to mitigate the liquidity risks:
Assets
Auto-Exchange Haircut
BTC
2.5%
ETH
2.5%
BNB
5%
ADA
5%
XRP
5%
DOT
5%
SOL
5%
USDT
0.01%
USDC
0.01%
BNFCR
0.0%
BFUSD
0.10%
Examples of Auto-Exchange
Example 1 (VIP 2 Client):
You’re trading in the Multi-Assets Mode. Your USDⓈ-M Futures Wallet has a positive BTC balance and a negative USDC balance.
Let’s assume your USDC balance falls to -20,000 USDC, which triggers the Auto-Exchange (below the -10,000 USD threshold), taking into account the 2.5% haircut rate in the process.
Subsequently, 20,000 USDC / 97.5% = 20,513 USDC of your BTC balance will be converted to USDC to cover the negative USDC balance in the USDⓈ-M Futures Wallet.
Example 2:
Under the Multi-Assets Mode, you don’t have any existing position or open order, and the USDⓈ-M Futures Wallet balance is 1 BNB + (-600) USDC
Suppose BNB/USDC = 700 USD
Your LTV = abs(-600)/(700 * (1 - 5%)) = 0.90
Suppose BNB/USDC = 600 USD
Your LTV = abs(-600)/(600 * (1 - 5%)) = 1.05 ≥ 0.995, Auto-Exchange will be triggered. Your BNB will be converted to USDC to clear the negative USDC balance.
To avoid triggering Auto-Exchange, you can convert or transfer margin assets to the USDⓈ-M Futures Wallet to maintain the negative balance below the -10,000 USD threshold. If you don't have any existing positions or open orders and there is a deficit in your USDⓈ-M Futures Wallet, you are advised to convert or transfer sufficient margin assets to the USDⓈ-M Futures Wallet in a timely manner to prevent the account LTV from going above 0.995, which would trigger Auto-Exchange.
To reduce risks, Binance may temporarily adjust the Auto-Exchange threshold and execute the conversion automatically. You may notice that the balance of a certain asset in your USDⓈ-M Futures Wallet is negative. However, this does not necessarily mean the balance of your USDⓈ-M Futures Wallet is at a loss.
