Forced Liquidation Mechanism Explanation

When a user fails to timely add margin and the position risk reaches the system’s set liquidation conditions, the platform will automatically trigger the “Forced Liquidation (FL)” mechanism to ensure overall market stability and fund security.

Conditions Triggering Forced Liquidation:

• Account Equity Below Maintenance Margin: When the user’s total account equity is insufficient to maintain the current position, the forced liquidation threshold is triggered.

• Position Loss Reaches Set Threshold: The system monitors the user’s position loss, and once it exceeds the acceptable range, forced liquidation can be triggered.

Forced Liquidation Process:

• System Automatically Closes Position at Market Price: No manual operation required from the user. The platform system will immediately close high-risk positions at the market price to control further losses.

• Insurance Fund Covers Negative Balance: If closing the position results in a negative balance (loss beyond margin), the system will use the ChainBitX platform insurance fund to cover the loss; the user will not owe additional debts.

Forced Liquidation Labels and Notifications:

• Forced Liquidation Notification: When a user is liquidated, the system will notify via APP push notifications and internal messages, informing the user that forced liquidation has been executed.

• Historical Records: Forced liquidated orders will be clearly marked with “Forced Liquidation” in the History Orders section, facilitating user review and strategy analysis later.