> ## Documentation Index
> Fetch the complete documentation index at: https://docs.intention.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidations

> Intention liquidates risky accounts in tiers — warnings, self-recovery, order-book clearing, vault takeover, and ADL — to protect solvency without socialized losses.

Leverage is the reason perpetuals exist, but it is also why exchanges fail. Liquidation is the risk-control process that keeps Intention solvent when a trader's losses grow beyond the collateral they posted. Done badly, liquidations can bankrupt users and leak losses onto the protocol. Intention's approach is tiered, transparent, and designed so that no user without a position ever bears another user's losses.

## Liquidation trigger

For **cross margin**: an account is liquidated when its maintenance margin ratio (MMR) drops below 100%. MMR is defined as:

```
MMR = margin_balance / maintenance_margin_required
```

For **isolated margin**: a position is liquidated when the mark price crosses its individual liquidation price. Each isolated position is liquidated independently; the rest of the account is unaffected.

## Five layers of protection

### Layer 1 — Risk warning and active intervention

* `MMR > 150%` — free to trade.
* `120% < MMR ≤ 150%` — risk warning. WebSocket, push, and UI notifications fire, suggesting the user add margin, reduce leverage, or close positions. Notifications are throttled to at most one every 30 minutes.
* `100% < MMR ≤ 120%` (cross only) — new opening orders are blocked. Only closing orders are accepted, so the user cannot make the situation worse.
* `MMR ≤ 100%` — liquidation begins.

Users can respond to warnings by manually adding margin or by enabling [automatic margin replenishment](/trading/add-margin) for isolated positions.

### Layer 2 — Self-recovery attempt

On first entry into liquidation, Intention first tries to let the account save itself:

<Steps>
  <Step title="Cancel orders">
    Cancel open orders (all orders in cross mode; orders for the affected symbol and side in isolated mode). If the cancellation alone restores MMR above 100%, liquidation ends here.
  </Step>

  <Step title="Auto-add margin">
    For isolated positions with auto-replenishment enabled, transfer `initial_margin + reserved_close_fee` from free balance (or whatever remains). If this restores MMR, liquidation ends.
  </Step>

  <Step title="Self-cross long and short">
    For cross-margin hedge mode, match offsetting long and short positions against each other directly at mark price. This reduces gross exposure without touching the public book.
  </Step>

  <Step title="Re-check and tag">
    If MMR still \< 100% (or \< 115% for accounts already tagged as "liquidating"), the account is tagged and liquidation proceeds to the active step-down layer.
  </Step>
</Steps>

### Layer 3 — Tiered order-book liquidation

Tagged accounts are liquidated in steps, one block at a time, by sending IOC limit orders to the public book at the position's bankruptcy price. The sizing rule prevents catastrophic market impact:

* **MMR \< 66.7%.** Full takeover by the vault (skip to Layer 4).
* **Single position ≤ \$100k.** Submit a full-size IOC limit in one block.
* **Single position > \$100k.** Submit an IOC for `min(max_single_order, 20% × position, distance_to_next_risk_tier)`.

If an IOC partially fills, a 30-second cooldown kicks in before the next chunk can be sent. This prevents a single large position from hammering the book in consecutive blocks.

User benefits from tier 3: graceful unwind instead of a zeroing click, and time for the market to absorb the position.

### Layer 4 — Liquidation vault takeover

If MMR drops below 66.7% or the position is small enough, the liquidation vault (LP) takes the entire position off the account at the bankruptcy price. Vault takeovers do **not** appear on the public tape or K-line — the transfer is internal and executes off-book.

The liquidation vault exists to absorb bad debt from liquidations that the public book cannot clear fast enough. It is funded by trading-fee allocations and by the profits of everyday liquidations that do clear at better-than-bankruptcy prices.

### Layer 5 — ADL

If the vault cannot safely hold more of a position — because it is already near its configured OI limit for that contract or because it has drawn down too much in a rolling window — Intention falls back to [Auto-Deleveraging (ADL)](/trading/adl), which closes counterpart profitable positions directly at the bankruptcy price.

## Behavior while liquidating

While an account is tagged "liquidating," Intention enforces a strict behavior matrix:

| Action             | Allowed?                           |
| ------------------ | ---------------------------------- |
| Open new positions | No                                 |
| Withdraw margin    | No                                 |
| Place orders       | No (all open orders are cancelled) |
| Add margin         | Yes                                |

This lets a user rescue the account without being able to add new risk.

## Cross and isolated coexistence

If an account holds both cross-margin and isolated positions, liquidation for each is independent. A cross-margin liquidation does not affect isolated positions (and vice versa). When the cross-margin side is mid-liquidation, isolated positions cannot auto-add margin from the shared wallet — the cross-margin process holds the free balance.

## What users should do

* Watch MMR proactively. The 150% warning is there for a reason.
* Consider enabling auto-replenishment on isolated positions that you cannot monitor.
* Pre-set [stop-losses](/trading/tp-sl) so you exit before a position ever reaches the liquidation price.
* In cross mode, remember that a single bad position can drag the whole account.