Real-Time Liquidation Thresholds

Real-Time Liquidation Thresholds are the precise price points at which a position is automatically closed by the protocol due to insufficient margin. Unlike static thresholds, these are calculated in real-time by the risk engine based on current market prices, asset volatility, and account-wide collateral health.

If the market moves against the position and hits this threshold, the system triggers the liquidation process to protect the protocol's capital. Setting these thresholds correctly is a delicate balance; if they are too tight, users face frequent and unnecessary liquidations, but if they are too loose, the protocol risks insolvency.

Real-time calculation ensures that the system reacts appropriately to the speed and intensity of market moves.