How Are Liquidations Triggered on Binance Margin?

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Binance Margin provides users with the flexibility to choose different leverage multipliers based on their risk tolerance and trading strategies. Depending on the product, leverage can range from 3x to a maximum of 10x.

1. How are liquidations triggered on Binance Margin?

When the liquidation threshold is reached, a user’s margin position will be liquidated, and their collateral will be sold to repay any liabilities and interest owed. Each margin mode and leverage multiplier has different liquidation margin levels:

2. How do liquidations work in Binance Margin?

There are two types of forced liquidation: regular liquidation and takeover liquidation. The system determines the liquidation method based on the market liquidity of the traded assets.

Regular liquidation

• Regular liquidation takes place within the user's margin account.
• Collateral assets are sold using limit orders to offset liabilities and accumulated interest.
• During the liquidation process, the account is locked, preventing the user from: transferring funds, borrowing or repaying assets, and trading.
• The liquidation process will terminate early if the liquidation engine detects the user’s Margin Level has risen above: 1.5 for Cross Margin 3X, 1.25 for Cross Margin 5X, 2 for Cross Margin Pro, and the Initial Risk Ratio for Isolated Margin. Proceeds from collateral assets that have been liquidated will be applied towards partial repayment of the user’s liability.

Takeover liquidation

• Takeover liquidation occurs when the traded assets lack sufficient liquidity during the given period.
• When triggered, all collateral assets and liabilities in the user's margin account are transferred to the Binance liquidation account.
• The liquidation engine consolidates and sells the collateral assets, and manages liability and interest repayments.
• During periods of high market volatility, takeover liquidation cases may take longer to complete due to multiple users’ collateral assets waiting to be sold.

During extreme market volatility or when the collateral ratio of a user's assets is low, both regular liquidation and takeover liquidation may occur. The liquidation engine will partially trade the collateral assets to repay some liabilities. If market liquidity worsens during this process, it transitions into a takeover liquidation. This transition helps minimize the impact on the market price volatility.

Examples

Scenario 1

User A has a net equity of 2 BTC and a 400,000 USDC loan in their Cross Margin account. They purchase 8 BTC at a price of 50,000 USDC, with a Margin Level (ML) of 1.25. When the BTC price drops to 44,000 USDC, the ML drops to 1.1, triggering a forced liquidation. In response, 9.09090909 BTC is sold, which covers the 400,000 USDC liability (assuming no interest) and a liquidation fee of 0.18181818 BTC, equivalent 8,000 USDC. After the liquidation, User A has 0.72727273 BTC remaining in their Cross Margin account.

User A can see the liquidation history and liquidation orders here.

Scenario 2

User B has a net equity of 100,000 SUPER (assuming no collateral haircuts) and a 400,000 USDC loan in their Cross Margin account. They buy SUPER at 1 USDC, with a Margin Level (ML) of 1.25. When the price of SUPER drops to 0.88 USDC, the ML falls to 1.1, triggering a forced liquidation.

Instead of immediately selling 500,000 SUPER, the liquidation engine determines that SUPER has poor liquidity and triggers a takeover liquidation to prevent further volatility. All collateral assets (500,000 SUPER) and liabilities (400,000 USDC) will be transferred from User B’s account to a unified takeover account. SUPER will be gradually sold based on market liquidity to repay the USDC liabilities.

Assuming an average SUPER trading price of 0.87 USDC in the unified takeover account, the remaining 27,000 USDC will be returned to User B’s Cross Margin account after repaying the 400,000 USDC debt and deducting a 8,000 USDC liquidation fee.

User B can see the liquidation history and takeover detail information here.

Scenario 3

User C has a net equity of 1 BTC and 50,000 SUPER (assuming no collateral haircuts), and a 400,000 USDC loan in their Cross Margin account. They purchase SUPER at 1 USDC, with a Margin Level (ML) of 1.25, assuming the BTC price is 50,000 USDC and remains unchanged.

When the price of SUPER drops to 0.866666667 USDC, the ML falls to 1.1, triggering a forced liquidation. The liquidation engine sells 1 BTC for 50,000 USDC. Instead of immediately selling 500,000 SUPER, it determines SUPER to have poor liquidity and initiates a takeover liquidation. All of User C’s collateral assets (450,000 SUPER and 50,000 USDC) and liabilities (400,000 USDC) are transferred to a unified takeover account.

Assuming an average SUPER trading price of 0.86 USDC in the unified takeover account, the remaining 29,000 USDC will be returned to User C's Cross Margin account after repaying the 400,000 USDC debt and deducting an 8,000 USDC liquidation fee.

User C can see the liquidation history, liquidation orders, and takeover detail information here.

3. What are the liquidation fees?

According to the Margin Service Terms of Use, a liquidation fee (which is a percentage of the liquidated assets) will be charged on both regular liquidation and takeover liquidation:

Liquidation fees are deducted from the users’ remaining assets in their margin accounts. Based on the scenarios illustrated above, since the total amount of liability at the point of liquidation is 400,000 USDC, the liquidation fee will be 8,000 USDC (2% * 400,000 USDC) for Cross Margin Classic Mode.

Important note: For full terms and conditions regarding liquidated assets, please refer to the Margin Service Terms of Use.

4. How to avoid forced liquidations?

In margin trading, forced liquidations can result in significant losses. To avoid this, we recommend the following risk management strategies:

1. Monitor margin levels and collateral values

• Regularly check the risk ratio of margin positions. For more details, please refer to Binance Margin Level and Risk Control.
• Ensure collateral is sufficient to maintain positions.
• Make necessary risk control adjustments in advance.

2. Take note of margin calls

• Pay attention to margin call notifications via emails, app push notifications, or in-app messages.
• Use these alerts to make timely decisions or adjust strategies to prevent forced liquidations.

3. Use the Auto Top-Up function

Users can also use the Auto Top-Up function to reduce the risk of forced liquidations. After enabling the function, the system will automatically transfer available assets from the Spot Wallet to the Margin Wallet. For more details, please refer to What is Auto Top-up and How to Use It.

Please note that due to extreme market movements, the margin level might hit the liquidation ratio immediately after touching the margin call ratio. Your positions might get liquidated before Auto Top-up can be performed in this case. You are strongly advised to monitor the margin level closely to avoid losses. Binance shall not be liable for any loss incurred.

Binance will use reasonable endeavors (but has no obligation) to send margin call and liquidation call notifications by email and internal messages. Binance has no responsibility for and does not in any way guarantee the timely delivery of such messages. The notifications serve as a risk warning and it is solely the trader’s responsibility to take appropriate action and avoid the liquidation of their positions. Please note that due to extreme market movements, the margin level might hit the liquidation ratio immediately after touching the margin call ratio, the margin call notification will be automatically canceled by the system and only a liquidation call notification will be dispatched.

Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. Digital asset prices are subject to high market risk and price volatility. The information provided does not constitute, in any way, a solicitation or recommendation or inducement to buy or sell the products. The value of your investment may go down or up, and you may not get back the amount invested. Cross-margining contributes to providing greater leverage than a regular margin account, and greater leverage creates greater losses in the event of adverse market conditions. There is increased risk that a user's cross-margin positions will be liquidated involuntarily, causing possible loss. Comments and analysis do not constitute a commitment or guarantee on the part of Binance. You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. Past performance is not a reliable predictor of future performance. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. This material should not be construed as financial advice. This product may not be available in certain countries and to certain users. This content is not intended for users/countries to which prohibitions/restrictions apply. For more information, see our Terms of Use and Risk Warning. To learn more about how to protect yourself, visit our Responsible Trading page.