When bitstar first appeared, the author was bright and originally thought to be innovative, but it was not until after studying bitmex that it found that bitstar's contract was similar to bitmex's perpetual swap contract. Of course, the advantage of bitstar is that there are many varieties of sustainable contracts.
A swap contract is a derivative. It is similar to traditional futures contracts from a trading perspective, but with a few differences.
It will not expire or be settled.
A perpetual swap contract is similar to a spot market for margin trading, so it trades close to the underlying reference index price.
This is different from futures contracts, which may trade at significantly different prices due to basis.
How does the swap contract not deviate from the spot price? The main mechanism for anchoring spot prices is the cost of funds.
The opening of positions in bitmex futures is the most important thing to deal with:
First, the market price was closed, and it was found that it could not be settled. The insurance fund was used again. Finally, the automatic triple-up mechanism of the opponent's disk was used. This is the most comprehensive plan I have ever seen.
How does the forced engine work?
When forced to close a position, the forced engine will first attempt to close the position at the current market price. If this fails, then an automatic lightening occurs again.
What is the automatic lightening mechanism?
Automatic lightening occurs when the forced flat is unable to close the market. Traders holding opposing positions will be closed according to their leverage and profit priority.
Automatic Light Reduction System (ADL) Overview
When investors are forced to close their positions, their remaining positions will be taken over by BitMEX's forced system. If the strong position is not able to close the position in the market, and when the mark price reaches the bankrupt price, the automatic lightening system will lighten the position of the investor holding the reverse position. The order of lightening will be determined based on leverage and profitability ratio.
Automatic lightening will be closed based on the bankrupt price of the strong position.
BitMEX uses insurance funds to prevent investors' positions from being automatically reduced. The fund is used to improve the price of unexecuted forced orders to prevent them from being taken over by the automatic lightening system.
The increase in the amount of the insurance base came from the price of Qianping's commission in the market at a price superior to the bankrupt price.
Note: As can be seen from this design, automatic lightening may be detrimental to the arbitrage reverse order, and it is necessary to automatically close the reverse position order after monitoring the strong level.
Forced liquidation
Most BitMEX contracts offer high leverage. In order to maintain the position, the investor must hold a certain percentage of the margin value of the position, also known as the maintenance margin. The minimum maintenance margin requirement can be found on the Risk Limits page.
If you are unable to meet the margin requirements, you will be forced to close the position and will lose your maintenance margin.
You can view the strong price of each position through the “hold position” tab and adjust the strong price by adding extra margin, adjusting the leverage slider, or by risk limit option.
Minimize the peace event
BitMEX uses a reasonable price tag approach to avoid forced liquidation due to lack of liquidity or market manipulation.
The risk limit also requires a higher margin level for a larger position. In this way, BitMEX's strong flat engine can use more margin to effectively close a large number of positions, otherwise these positions are difficult to safely close. In a safe situation, the big position will be gradually flattened.
In addition, during the forced event, BitMEX will cancel all outstanding orders for this contract, which will release the deposit and possibly avoid the flattening. Note: The commission of other contracts is not affected.
Strong process
BitMEX uses a partial-strength method that automatically attempts to reduce maintenance margin requirements and avoids all positions being flattened.
Users with the lowest risk limit
BitMEX cancels all unfilled orders for this contract.
If the maintenance margin requirement is not met at this time, the position is taken over by the forced engine at the bankruptcy price.
Users with high risk limits
The Forced Engine will attempt to reduce the user's risk limit in the following ways, thereby reducing the margin requirement:
Try to maintain the current commission and position unchanged, and reduce the user's risk limit.
Cancel unfilled orders, but retain existing positions and reduce the user's risk limit.
Submit a FillOrKill (full execution or immediate cancellation) commission, the value of this delegate equals the difference between the current position value and the risk limit value that meets the current margin requirement, thus avoiding further flattening.
If the position is still in a strong state, then all positions will be taken over by the forced engine at the bankrupt price.
System gains and losses
If BitMEX can close the position at a better price than the bankruptcy price, then additional funds will be added to the insurance fund.
If BitMEX cannot close the position at the bankruptcy price, then BitMEX will spend the insurance fund and attempt to close the position in the market. If it is still not possible to clean up the strong proxy, this will result in an automatic lightening event.
Does BitMEX use a hot wallet?
Not used, there is a multi-signature cold wallet for all bitcoins on BitMEX.
What is a multi-signature cold wallet?
It is a bitcoin wallet that is stored offline, and it takes at least m of n signatures to spend any money. At BitMEX, any capital spend requires at least 2 signatures from 3 partners
Note: This mechanism design guarantees security, but means that the withdrawal may not be automatic, that is, it cannot be real-time, and only the currency can be issued periodically. If I design an exchange, I will also adopt this scheme.
When is Bitcoin withdrawal processed?
The deadline for Bitcoin withdrawals is UTC 13:00 per day (ie 21:00 Beijing time). Soon after, Bitcoin will be sent to the address you specified.
In addition, the speed of bitmex is as fast as flying! awesome!
You can register for the experience from the following link. Futures are risky and the experience must be cautious:
Your invitation link: https://www.bitmex.com/register/xHuUT6