A quick, honest look at how the recommended route compares.
| Feature | SimpleSwap | Typical exchange | P2P |
|---|---|---|---|
| No account / sign-up | ✓ | — | — |
| Instant, non-custodial | ✓ | ✓ | — |
| Hundreds of assets | ✓ | — | ✓ |
| Fixed or floating rate | ✓ | — | — |
| 24/7 support | ✓ | ✓ | ✓ |
Straight answers to what people actually ask about what is liquidation in crypto — one topic per card.
Liquidation in crypto primarily occurs when a trader's leveraged position can no longer be maintained due to insufficient collateral. This happens when the market value of the leveraged asset moves unfavorably, pushing the margin balance below the exchange's required maintenance margin level.
The liquidation price is calculated based on factors like your initial margin, the leverage used, and the asset's current price. Exchanges employ complex algorithms to determine the exact price point at which your position will be liquidated to cover potential losses.
You can prevent liquidation in crypto by reducing your leverage, adding more collateral to your position (a 'margin top-up'), or closing parts of your leveraged trade. Monitoring market conditions and utilizing stop-loss orders are also effective preventative measures.
Partial liquidation is a mechanism where an exchange closes only a portion of a trader's leveraged position instead of the entire position. This occurs in stages, aiming to reduce the leverage and bring the margin ratio back to a healthy level without fully liquidating the user's funds.
While liquidation in crypto often represents a loss for the trader, it's a necessary mechanism to maintain market stability and prevent cascading failures on exchanges. It protects both the exchange and other traders from excessive counterparty risk, ensuring overall market health.
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