OKEx liquidation Issues

in #schoolofminnows3 years ago

The top contract holder at OKEx , one of the largest crypto echange in terms of volume , had accumulated a $460 million long position before he was liquidated on July 31st. This big a position being liquidated is a big story in itself but the main issue here is that that the liquidation did not get filled in the market. A roughly $420 million overhang exists in this weekly settlement period that impacts all three maturities on BTCUSD Futures, is waiting to be filled just above $8000.

OKEx features a “clawback policy,” which means that when a trader’s margin balance reaches zero, the policy kicks in and the exchange will make a concurrent limit order at the current exchange rate. If this order remains unfilled by the time of settlement, profitable traders will have to cover the cost, which most probaly are traders on short contracts.

OKEx has 10 btc in their insurance fund, which they would used to reconcile situations like the current one. Unfortunately the liquidation has resulted in a 950 btc loss. Since the insurance fund of 10 BTC will not cover the loss, OKEx will need tp make a decision on how they plan to reconcile this liquidation sitting on their books.

If BTC’s connot embark on an upward move to 8k to fill the liquidations, this massive wall will have to be dealt with by using a clawback. if this were to happen , OKEx users will will not be a happy bunch and will move to different trading platforms and shorters will close their positions as they do not want to be held responsible for the payback procedure.

For now it seems that $BTC will continue to trade in the mid to lower 7K range in until Okex makes a decision


Congratulations! This post has been upvoted from the communal account, @minnowsupport, by supsnehal from the Minnow Support Project. It's a witness project run by aggroed, ausbitbank, teamsteem, theprophet0, someguy123, neoxian, followbtcnews, and netuoso. The goal is to help Steemit grow by supporting Minnows. Please find us at the Peace, Abundance, and Liberty Network (PALnet) Discord Channel. It's a completely public and open space to all members of the Steemit community who voluntarily choose to be there.

If you would like to delegate to the Minnow Support Project you can do so by clicking on the following links: 50SP, 100SP, 250SP, 500SP, 1000SP, 5000SP.
Be sure to leave at least 50SP undelegated on your account.

This post received a $0.042 (18.27%) upvote from @upvotewhale thanks to @supsnehal! For more information, check out my profile!

Coin Marketplace

STEEM 0.48
TRX 0.09
JST 0.061
BTC 49027.03
ETH 4187.25
BNB 571.93
SBD 5.84