Liquidations

Liquidations will protect the Nexus Exchange from insolvency by ensuring that traders maintain sufficient margin to support their leveraged positions.

When a trader’s account equity falls below the required maintenance margin, NexusCore’s liquidation engine will automatically intervene and close the position at the current mark price, preventing negative balances and preserving system-wide solvency.

How Liquidation Works

Mark Price & Equity

Nexus will use a mark price derived from the oracle. A trader’s equity will be computed from:

$$\text{Equity} = C + \text{PnL}_{\text{unrealized}}(P_{\text{mark}})$$

Margin Requirements

• Initial Margin

$$M_{\text{initial}} = \frac{S \times P_{\text{entry}}}{L}$$

• Maintenance Margin

$$M_{\text{maintenance}} = \frac{1}{2 \cdot L_{\max}}$$

Liquidation Trigger

A position will be liquidated when equity falls below maintenance margin.

Liquidation Process

1. Trigger: Equity falls below maintenance margin.

2. Execution: A dedicated on-chain liquidator sub-account closes the position at or near mark price.

3. Bankruptcy Protection: A price cap prevents negative balances.

4. Insurance Fund: Covers any remaining shortfall if the position cannot be closed in time.