Liquidations

Liquidation is what happens when an account no longer has enough collateral to safely support its positions.

To understand how it works in SYMMIO, it helps to first look at how your collateral is tracked. When you send a quote, the margin required for that position moves into a pending state. You can’t use that amount to open other trades, but it still counts as part of your allocated balance when the system checks if you’re solvent. Once a solver accepts your quote and the position opens, that margin becomes locked: it actively backs your open trade. Anything not pending or locked is your free balance.

All of your positions on SYMMIO are treated as cross margin. That means your entire allocated balance, across all positions and pending quotes, works together to support your risk. As your unrealized PnL (UPnL) changes, the system leans on these collateral sources in order: first your locked margin, then your free balance, and finally your pending locked amounts. If your total UPnL is still above the lowest allowed threshold, you’re safe. But if losses grow so large that even your pending locked funds are not enough, the account is considered unsafe and liquidation is triggered.

Because the system is cross-margin, Party A is liquidated as a whole. All of Party A’s open positions and outstanding quotes are moved into a liquidated state at once — in practical terms, everything is closed or cancelled together.

When this happens, special actors called liquidators step in. They use signed data from the Muon network to prove your total losses and the prices of the markets you’re trading. The protocol then closes your positions, redistributes collateral between you and your counterparties, and pays a small fee to the liquidator as a reward for keeping the system safe. Your CVA and margins are used according to the rules of the system.

Example

To illustrate this process, let's use an example:

Imagine Alice (Party A) has $1,000 allocated for trading. She's got multiple positions open, all cross-margined together. Let's say she's got:

• $500 locked in active positions

• $200 in pending locked (quotes waiting to be filled)

• $300 free and available

• $100 in Locked CVA

Stage 1: Alice's has manageable losses.

Stage 2: Alice suffers deeper losses

Stage 3: Alice has critical losses and is about to be liquidated

Stage 4: Alice is liquidated

Party B (the solver) can also be liquidated, but in a more targeted way. If a solver’s allocated balance is not enough relative to a specific Party A, they can be liquidated just for that relationship.