> ## Documentation Index
> Fetch the complete documentation index at: https://docs.perpetradex.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidations

> How liquidations work and how to avoid them.

When your margin ratio falls below the maintenance margin ratio, your position gets liquidated. Here's the mechanics.

## When Liquidation Happens

**Condition:** Margin Ratio \< Maintenance Margin Ratio

Your margin ratio = Total Collateral / Total Position Notional. If it drops below the required maintenance level, the system liquidates you to protect the protocol and other users.

<Warning>
  Leverage magnifies risk. A small adverse move can trigger liquidation. Monitor your liquidation price and use stop-losses.
</Warning>

## How It Works

Perpetra uses **decentralized liquidations**. Unlike CEXes that market-sell into the book (causing cascades), positions are **transferred to liquidators at a discount**.

1. Your position becomes undercollateralized
2. Liquidators can claim your position at a discount
3. You lose remaining margin; liquidators earn a fee
4. Your position is closed

Anyone with an account can act as a liquidator—no whitelist. The protocol is permissionless.

## Liquidation Tiers

**Low tier (BTC, ETH):** Liquidators take a ratio across multiple symbols. Can't claim just one.

**High tier (others):** Liquidators can claim a single symbol. Useful for targeted liquidations on alt positions.

## Fees

| Market        | User Pays | Liquidator Gets |
| ------------- | --------- | --------------- |
| BTC, ETH, SOL | 0.60%     | 0.30%           |
| Others        | 1.20%     | 0.60%           |

The fee is taken from your remaining margin. If margin can't cover the fee, the Insurance Fund steps in.

## Insurance Fund & ADL

If liquidators don't take positions (e.g. extreme volatility), the **Insurance Fund** absorbs them. The fund is funded by liquidation fees and protocol reserves. \$PETRA holders can also stake into the Insurance Fund Pool to earn a share of liquidation fees—see [Insurance Fund Staking](/petra/staking#insurance-fund-staking) for details.

In rare cases, **Auto-Deleveraging (ADL)** may run: profitable positions are offset against Insurance Fund positions to restore solvency. ADL is a last resort.

## Avoiding Liquidation

1. **Monitor liquidation price** — It's shown in the UI. Know it before you open.
2. **Use stop-losses** — Automate exits before you hit liquidation.
3. **Lower leverage** — Less leverage = more buffer.
4. **Add margin** — Deposit more USDC to improve your ratio.
5. **Reduce size** — Close or reduce positions to lower notional.

<Tip>
  Mark price (not last price) triggers liquidations. That reduces manipulation from wicks—flash crashes are less likely to liquidate you unfairly.
</Tip>