Liquidation isn't a punishment — it's a mechanism. Understanding how it triggers is the first step to making sure it never happens to you.

What This Guide Covers

  • What liquidation is and when it triggers
  • Where to find your liquidation price
  • Four ways to reduce your liquidation risk
  • What happens to your margin after liquidation

Before You Start

  • You've read How Leverage Works on LeverUp — liquidation and leverage are closely related
  • You have an open or planned position you want to understand better

What Is Liquidation

When you open a leveraged position, you put up collateral as margin. Liquidation happens when your position's losses eat through enough of that margin that the protocol automatically closes your trade to prevent the loss from going further.

On LeverUp, a position is liquidated when it loses approximately 85% of its collateral value. At that point, the protocol closes your position automatically — no action required from you, and no warning beforehand.

After liquidation, your remaining margin is not returned.

Two Ways Liquidation Can Trigger

1. Market price reaches your liquidation price
The most common trigger. As price moves against your position, your unrealized loss grows. Once it hits the liquidation threshold, the position closes.

2. Fees accumulate and erode your margin
Holding fees and funding rates reduce your effective collateral over time. On long-duration trades, fees alone can bring the liquidation price closer to your entry — even if the market hasn't moved much against you.

Where to Find Your Liquidation Price

Before opening: It's shown in the order summary panel. Check it before you confirm every trade.

After opening: It's displayed in the Positions panel next to your open trade. It updates in real time as fees accumulate.

For the latest liquidation parameters and formulas, see the official docs: leverup.gitbook.io/docs/trading/liquidation

Four Ways to Reduce Liquidation Risk

1. Set a Stop Loss

A stop loss automatically closes your position before it reaches the liquidation price. If you set a SL at a 20% loss on a 10x position, you exit long before the 85% liquidation threshold. This is the most effective protection.

2. Use Lower Leverage

The lower your leverage, the further your liquidation price sits from your entry. At 5x leverage, a price needs to move ~17% against you to liquidate. At 50x, only ~1.7%.

3. Monitor Funding Rates

If the funding rate is running against your position, it's silently reducing your collateral every hour. On multi-day holds, this cost compounds. Check the funding rate on the market ticker before holding overnight.

4. Watch Your Position Regularly

Liquidation price moves over time as fees accumulate. A position that looked safe when you opened it may be closer to liquidation a day later. Check in on open trades regularly.

What Happens After Liquidation

Once liquidated:

  • Your position is closed at the current market price
  • Your remaining margin is retained by the protocol as part of settlement
  • Nothing is returned to your wallet
  • The trade appears in your History tab as a closed position

There is no margin call on LeverUp. You won't receive a warning before liquidation — the protocol acts automatically when the threshold is crossed.

Important Things to Know

Liquidation price is not fixed. It moves as holding fees and funding rates accumulate. The number shown when you open a trade will shift over time — always check the live figure in your Positions panel.

Liquidation is protocol-executed, not manual. You don't need to do anything when a position is liquidated — and you can't stop it once it's triggered. The only protection is acting before it happens.

The protocol parameters are updated periodically. For the most current liquidation thresholds and formulas, always refer to the official LeverUp documentation rather than a fixed number in any article.

Common Mistakes

Setting a Stop Loss below the liquidation price. If your SL is set at or below the liquidation price, it provides no protection — the position liquidates before the SL can execute. SL must be set above liquidation price (for longs) or below it (for shorts).

Opening high-leverage positions and walking away. At 100x, the market only needs to move 0.85% against you. Leaving such a position unmonitored is very high risk.

Not accounting for funding costs on long holds. A position held open for several days can accumulate significant fees. Factor this into your plan when holding through weekends or volatile periods.

Risk Reminder

When a position is liquidated, your margin is lost entirely. There is no partial recovery, no margin call, and no warning. The best protection is a combination of appropriate leverage, a properly set stop loss, and regular monitoring of your open positions.