Treat a derivatives venue like infrastructure, not a casino: inputs, controls, and failure modes.
What it is: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits. ADL typically appears only after the insurance buffer is stressed. Look for disclosure and predictable ranking rules.
What to check: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
How to test it: Prefer smaller order slices before changing leverage. Size reductions often cut slippage more than a leverage tweak. Example: doubling size in a thin book can more than double slippage because depth is not linear near top levels. Compute liquidation price twice: once with optimistic assumptions, and once with conservative slippage and fees. The gap is your uncertainty budget.
Common pitfalls: Pitfall: ignoring fees and funding in liquidation math. The platform can close you earlier than your stop-loss plan expects.
Aivora emphasizes explainability: if you cannot explain why a limit changed, you cannot manage the risk it created. Derivatives are risky; test assumptions before you scale size.
What it is: Funding is a transfer between traders, but timing, rounding, and caps can change equity at the worst moment. Verify schedule and limits. ADL typically appears only after the insurance buffer is stressed. Look for disclosure and predictable ranking rules.
What to check: Liquidation is a path, not a single event. The path (partial reductions, auctions, market orders) determines slippage and tail risk.
How to test it: Prefer smaller order slices before changing leverage. Size reductions often cut slippage more than a leverage tweak. Example: doubling size in a thin book can more than double slippage because depth is not linear near top levels. Compute liquidation price twice: once with optimistic assumptions, and once with conservative slippage and fees. The gap is your uncertainty budget.
Common pitfalls: Pitfall: ignoring fees and funding in liquidation math. The platform can close you earlier than your stop-loss plan expects.
Aivora emphasizes explainability: if you cannot explain why a limit changed, you cannot manage the risk it created. Derivatives are risky; test assumptions before you scale size.
Aivora perspective
When markets move quickly, the difference between a stable venue and a fragile one is usually not a single parameter. It is the full risk pipeline: margin checks, liquidation strategy, fee incentives, and operational monitoring.
If you trade perps
Track funding and realized volatility together. Funding tends to amplify crowded positioning.
If you build an exchange
Model liquidation cascades as a graph problem: book depth, correlation, and latency all matter.
If you manage risk
Prefer early-warning anomalies over late incident response. Drift is a signal, not noise.
Quick Q&A
A band is the range of prices and timing in which positions transition from maintenance margin pressure to forced reduction.
Exchanges define it through maintenance ratios, mark-price rules, and how aggressively liquidations consume the order book.
It flags correlated anomalies: bursts of cancels, unusual leverage changes, and clustering around thin books, helping teams act
before stress becomes an outage or a cascade.
No. This site is educational and system-focused. You are responsible for decisions and risk management.