What Is Liquidation? Cross Margin, ADL and Price Calc
Last Updated: September 21, 2026
What is liquidation? It is the forced closing of a leveraged position once losses erode a trader's margin below the exchange's required level. The query draws 6,400 monthly searches worldwide as of September 2026, with related terms like "what does liquidate mean" adding another 1,400 (Ahrefs). On EVEDEX, liquidation runs on cross margin and the mark price.
Cross Margin vs Per-Position Margin
Liquidation risk is inseparable from leverage trading on crypto futures markets, and how close a position sits to its liquidation price depends on the margin mode backing it. Two models exist across the industry: a per-position mode that walls off collateral to a single trade, and cross margin, which backs every open position with the full account balance. EVEDEX runs only the second model. The table below compares them directly.
| Feature | Cross Margin | Per-Position Margin |
|---|---|---|
| Collateral pool | Entire USDT account balance backs every open position | Only the margin assigned to that specific position |
| Liquidation trigger | Triggered when total account equity falls to the maintenance level across all positions | Triggered when that position's own allocated margin is exhausted |
| Effect of multiple positions | A loss on one position draws on the whole balance, and a profit on another can offset it | Each position lives or dies on its own; a profitable position cannot rescue a losing one |
| EVEDEX support | Only margin mode offered; every position shares one pool | Not offered |
Data as of September 21, 2026. Margin-mode mechanics described generally across the industry; EVEDEX's mode and thresholds: EVEDEX trading terms.
How much this matters depends on holding period. A day trade closed within hours rarely gives adverse price action enough time to erode account-wide equity, while a swing trade held for days sits exposed to cross-margin drawdown for longer, and to funding charges on top of it.
How Liquidation Price Is Calculated on Cross Margin
Liquidation price is the level at which the platform's engine closes a position to stop losses from exceeding available collateral. On a cross-margin account, that trigger depends on total account equity — balance plus unrealized profit and loss across every open position — rather than the margin assigned to just one trade. Two simplified examples below show the mechanics; exact buffers, fees, and the margin-call threshold are shown live on the EVEDEX terminal.
Example 1 — single position. A trader deposits $1,000 USDT and opens one long BTC-USD position at 10x leverage, $5,000 notional, entering at $76,888 (BTC/USD, CoinGecko, September 15, 2026). Initial margin used is $500, or 50% of account equity. As price falls, unrealized losses reduce equity while the $500 margin requirement stays fixed. A margin call appears once margin usage reaches 80% — equity down to $625, meaning BTC has to fall about 7.5% from entry. Treating 100% margin usage as a simplified liquidation trigger, equity would need to drop to $500, roughly a 10% fall from entry, before the position is closed at the mark price; fees and buffers move the real threshold slightly earlier.
Example 2 — two positions sharing one pool. The same $1,000 account instead opens two positions: long BTC-USD and long ETH-USD, $2,500 notional each at 10x leverage, for a combined $500 initial margin and the same 50% starting usage. If BTC drops 10% while ETH stays flat, the BTC leg alone loses $250; equity falls to $750 and usage rises to about 67%, short of a margin call, because ETH's untouched margin still backs the account. If both legs drop together, the losses draw from the same $1,000 pool at once, and the account can reach its 80% or 100% usage threshold faster than either position would in isolation. That pooling is what "cross" means: the account, not the individual trade, is the risk unit.
What Auto-Deleveraging (ADL) Does
Auto-deleveraging is a backstop for when a liquidation cannot be filled at a fair price because the market moved too fast or too far. Instead of leaving the resulting loss unfunded, the exchange reduces opposite, profitable positions in a defined order to close the gap, which means a trader who did nothing wrong can still see a winning position partially closed. EVEDEX launched a $500,000 ADL Protection Reserve on July 18, 2026, specifically to reduce how often that happens, absorbing part of the shortfall before profitable positions have to be trimmed.
ADL and liquidation solve related but different problems. Liquidation closes a losing position before its own losses exceed the trader's collateral; ADL exists for the harder case where the losing side's liquidation still leaves a shortfall, typically because the market gapped past the liquidation price before the order could fill. Exchanges without a large enough buffer for that gap have to pass the shortfall on to profitable traders on the other side of the market, which is exactly the scenario the reserve fund is meant to reduce the frequency of. A bigger reserve does not make liquidation itself less likely; it makes the knock-on effect on unrelated, profitable positions less likely.
Reducing Liquidation Risk
Three habits do most of the work. First, use less leverage than the ceiling allows — the examples above start at 50% margin usage precisely because that buffer is what separates a margin call from a routine dip. Second, watch margin usage directly rather than just the price chart, since the 80% margin-call threshold gives a window to add funds or close part of a position before liquidation. Third, size positions with cross margin's pooling in mind: adding a second or third position draws on the same collateral as the first, so a string of correlated trades can reach the liquidation threshold faster than a single one would.
A few more specific checks help before and during a leveraged trade:
- Recalculate the liquidation price after every deposit or withdrawal. Adding or removing USDT changes total account equity, which moves the liquidation price for every open position on a cross-margin account, not just the one being adjusted.
- Treat the margin-call threshold as the real deadline, not the liquidation price itself. By the time margin usage reaches 100%, there is no more time to react; the 80% warning is the point where adding funds or trimming size still works.
- Avoid stacking correlated positions right before a scheduled event. Two positions that move together, such as two large-cap crypto pairs, behave like one bigger position under cross margin during a shared price shock.
- Compare the calculated liquidation price to recent volatility, not just to entry price. A liquidation price that sits inside a range the asset has moved through in a single day offers far less real protection than the leverage number alone suggests.
- Keep a margin buffer beyond the minimum the position technically needs. The two-position example above shows that spare, unused margin from a flat or profitable position is what keeps a losing leg from reaching liquidation sooner.
What Is Liquidation Risk on EVEDEX
EVEDEX runs every position on cross margin in USDT; there is no per-position alternative, so account-wide equity, not a single trade's allocated margin, determines when a position is liquidated. Liquidation executes at the mark price rather than the last traded price, and a margin call warning appears once margin usage reaches 80%. Leverage follows a ladder by pair: up to 200x on BTC-USD, ETH-USD, and SOL-USD for positions up to $50,000 notional, 100x on pairs like XRP, oil, silver, and gold, 75x on 24 pairs, and 50x on 18 pairs. Margin and deposits are posted in USDT, with a minimum deposit of 6 USDT, and fees run at 0.015% maker and 0.045% taker before cashback of up to 35%. An ADL Protection Reserve of $500,000, active since July 18, 2026, is designed to cut the number of profitable positions forced into auto-deleveraging. Perpetual futures carry a high risk of loss.
