Tiered Leverage Description

Monochrome perpetual contracts use tiered leverage for all trading accounts, which can reduce the possibility of massive forced liquidation.

If some users have large positions, they will add risk to other users, and if their positions are liquidated, other users may experience auto deleveraging. The tiered leverage incremental model helps avoid this by increasing margin requirements for large positions.

The larger the positions tiered leverage requires, the higher the margin level is.

When the position is large, once liquidation is triggered, there is a risk that it cannot be safely liquidated, which will affect the market. The liquidation engine of Monochrome.exchange can use more margin to effectively close the position in large quantities.

If the liquidation is triggered, Monochrome.exchange will cancel all unfilled orders of the contract to release the margin and maintain the position. Orders of other contracts will not be affected.

Monochrome uses a partial liquidation method to close positions step by step. This method will automatically try to reduce the maintenance margin requirement and avoid all positions being liquidated.

Dynamic tiered leverage

Each contract has a base leverage limit and increment. These parameters, combined with the base maintenance and initial margin requirements, are used to calculate the full margin requirement for each position.

As the position increases, so do the maintenance and initial margin requirements. The margin rate will increase or decrease as the tiered leverage changes.

Modify leverage

At present, users are supported to modify different leverage multiples in both long and short positions. They can modify them from the isolated leverage multiple, and after modification, success will be determined according to the maximum tiered leverage they allowed.

Monochrome uses a partial liquidation method to close positions step by step. This method will automatically try to reduce the maintenance margin requirement and avoid all positions being liquidated.

Users with minimum tiered leverage

Monochrome will cancel all unfilled orders for this contract. If the maintenance margin requirement is not met at this time, the position will be taken over by the liquidation engine at the bankruptcy price.

Users with high tiered leverage

The liquidation engine will try to reduce the user's leverage level by the following methods, thereby reducing the margin requirement:

• Cancel the unfilled order, but keep the existing position, and reduce the user's leverage level.
• If the position is still liquidated, the entire position will be taken over by the liquidation engine at the bankruptcy price.