Liquidation

1. Overview

The TRS system enforces a minimum maintenance margin requirement to manage risk. If a user's net asset value falls below the required threshold, liquidation is triggered to mitigate potential losses.

• Maintenance Margin Rate: X% (differ from the underline assets)

• Liquidation Condition: A user’s net assets must be at least X% of the position value; otherwise, liquidation occurs.

---

2. Liquidation Price Calculation

2.1 Long Position Liquidation Price

For long positions, the net asset value is calculated as:

Debt accrues over time:

where:

Thus, the liquidation price for long positions is:

---

2.2 Short Position Liquidation Price

For short positions, the net asset value is calculated as:

Debt quantity accrues over time:

Thus, the liquidation price for short positions is:

---

3. Liquidation Protection Mechanism

To prevent unnecessary or abnormal liquidations, the TRS contract incorporates an additional validation step:

• When liquidation is triggered, the contract first verifies whether the AMM price confirms the expected liquidation condition.

• If the AMM price does not meet the expected conditions, liquidation is halted to protect users from unintended liquidations due to temporary price fluctuations.

This dual-check mechanism ensures a fair and stable liquidation process, minimizing unnecessary liquidations and enhancing user security.

---

4. Summary

• The TRS system enforces a maintenance margin rate to determine liquidation.

• Liquidation prices are calculated differently for long and short positions.

• A secondary AMM price validation ensures liquidations only occur under proper conditions.

This mechanism safeguards users from abnormal liquidations while maintaining the system’s risk management integrity.