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Liquidation is an automatic position close triggered when your collateral falls below a dynamically calculated threshold. Ostium uses margin-based liquidation with no margin calls.

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Liquidation Threshold

Ostium maintains a 25% collateral backstop for all leveraged trades. At maximum leverage for a given pair, liquidation triggers at a 75% loss. At lower leverage, the threshold is deeper (closer to total loss). The formula: 
Liquidation Threshold (% loss) = 100% − (Leverage / MaxLeveragePair × 25%)
Example: 20x long on BTC/USD (max leverage 200x): 
100% − (20 / 200 × 25%) = 97.5%
Liquidation triggers at a 97.5% loss of collateral, meaning a price move of roughly 97.5% / 20 = 4.875% against you.

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Worked Examples

All examples assume 1,000 USDC collateral. The price move column shows approximately how far the asset must move against you to trigger liquidation.
LeverageMax Pair LeverageThreshold (% loss)Price Move to Liquidate
5x200x99.375%~19.9%
10x200x98.75%~9.9%
20x200x97.5%~4.9%
50x200x93.75%~1.9%
100x200x87.5%~0.9%
200x200x75%~0.4%
Higher leverage means a smaller price move triggers liquidation. At 200x, a move of less than half a percent liquidates the position.

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Liquidation Price

For a long position, the approximate liquidation price is: 
Liquidation Price ≈ Entry Price × (1 − Threshold / Leverage)
For a short position: 
Liquidation Price ≈ Entry Price × (1 + Threshold / Leverage)
These are approximations. Accrued rollover fees reduce your effective collateral over time, which brings the actual liquidation price closer to your entry. The UI displays the exact liquidation price accounting for all fees.

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How Liquidation Executes

Liquidations are executed automatically by keeper bots via Gelato Functions. When the mid-price crosses your liquidation price, the bot submits a liquidation transaction onchain. The protocol pays the gas fee. You are not charged. Execution typically occurs within seconds of the threshold being breached, depending on network congestion.

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Collateral After Liquidation

There is no partial recovery after liquidation. All remaining collateral is retained by the protocol as part of settlement.
See Vault Overview for how settlement flows reconcile onchain and offchain.

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Reducing Liquidation Risk

Four mechanics affect how close your position is to liquidation: Stop-loss orders. An SL closes the position before the liquidation threshold is reached. Placing an SL above the liquidation price (longs) or below it (shorts) exits the position in advance of the liquidation trigger. An SL at a 20–30% loss on a 20x position exits long before the 97.5% threshold. Leverage. Lower leverage gives a deeper loss threshold and requires a larger price move to liquidate. A 5x position tolerates nearly a 20% move against you; a 200x position tolerates less than 0.4%. Added collateral. Depositing additional USDC into an open position reduces effective leverage and pushes the liquidation price further away. This costs nothing. See Managing Positions. Holding costs. Rollover fees accrue continuously on all pairs and reduce effective collateral. On multi-day positions, these costs bring the liquidation threshold meaningfully closer.

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FAQ

No. Remaining collateral is retained by the protocol as part of settlement. Mechanics for reducing liquidation risk (stop-losses, lower leverage, added collateral, holding-cost awareness) are covered in the section above.
Typically within seconds of the mid-price crossing your liquidation threshold. You cannot reverse a liquidation once it begins.
Yes. There are no margin calls or advance warnings. Liquidation is automatic and executes whenever the mid-price crosses your threshold, regardless of whether you are online. Stop-loss orders execute autonomously for this reason.
Your liquidation threshold (percentage loss) is fixed at open. However, accrued rollover fees reduce your effective collateral, which moves your actual liquidation price closer to the current market price over time. The UI updates the displayed liquidation price to reflect this.
  • Managing Positions — Add collateral or adjust SL to improve your margin.
  • Fees — Rollover fees and how holding costs affect your collateral.
  • Opening a Trade — How leverage, collateral, and fees determine your position.