Liquidations

Nunchi markets use Hyperliquid's core liquidation engine. A position is liquidated if its margin falls below the maintenance requirement, based on the Mark Price. For positions over $100k, a partial liquidation (20%) is triggered first, followed by a 30-second cooldown. Nunchi markets do not utilize a liquidator vault like HLP.

The Liquidation Process

When a position's margin requirements are breached, the Nunchi system will automatically send market orders to reduce or close the under-margined position until the account's equity is back above the maintenance margin level. If the liquidation is successful in restoring the margin, any remaining collateral stays in the user's account.

To minimize market impact, the engine uses a partial liquidation mechanism for larger positions.

• For positions with a notional value greater than $100,000 USD, the engine will initially liquidate only 20% of the total position size.

• After this partial liquidation, a 30-second cooldown period begins for that account.

• If the account remains under-margined and is flagged for liquidation again during this 30-second window, subsequent liquidation orders will target the full remaining position size.

Example: A trader holds a large, highly-leveraged long position in the T-Bill Yield Perp (TBY-PERP) with a notional value of $250,000. If their equity breaches the maintenance margin, the system will first send a market order to sell $50,000 notional (20%). A 30-second cooldown then starts. If the market continues to move against them and their account is still under-margined within that 30-second window, the next liquidation order will target the full remaining $200,000 position.

A Note on HIP-3 Markets: No Liquidator Vault

Unlike some validator-deployed perpetuals on Hyperliquid that may be backstopped by a liquidator vault (like HLP) for deeply under-margined positions, Nunchi's HIP-3 deployed perpetuals do not utilize this mechanism. This backstop does not apply to any markets operated by Nunchi.

Estimating Liquidation Price

The Nunchi user interface provides two liquidation price estimates:

1. Pre-Trade Estimate: A preliminary guide that can differ from the final price, especially if market conditions or liquidity change when an order is filled.

2. Post-Fill Estimate: A more accurate estimate based on the actual entry price. Note that this value will still change over time as funding accrues or as PnL from other positions in a cross-margin account affects the total account equity.

Leverage Slider Impact

• In cross-margin mode, the leverage slider primarily affects the initial collateral posting, not the actual liquidation price (which depends on the total account value and all open positions).

• In isolated-margin mode, the leverage a user selects directly determines the amount of margin in that specific position, and therefore has a direct impact on its liquidation price. All Nunchi HIP-3 markets use isolated margin by default.

The Exact Formula

The exact liquidation price can be calculated with the following formula:

liq price = price - side x (margin available / position size) / (1 - l x side)

In this formula:

• side = +1 for a long position, –1 for a short position

• l = 1 / maintenance leverage (this is a variable based on the asset's risk profile)

• margin available (isolated) = isolated margin – maintenance margin required for that position