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PnL & Liquidation Price

Opening a position

Users can click "Long" or "Short," depending on which side to open a leverage position on.
If users choose to hold a long position, they will earn a profit if the token's price goes up or make a loss if the token's price goes down.
If users choose to hold a short position, users will earn a profit if the token's price goes down or make a loss if the token's price goes up.

For linear / U-based contracts:

Long PnL = (Exit Price - Entry Price) x Position Size
Long Liquidation Price = Entry price x (1 - Initial Margin%) / (1 - Maintenance Margin%)
Short PnL = (Entry Price - Exit Price) x Position Size
Short Liquidation Price = Entry Price x (1 + Initial Margin%) / (1 + Maintenance Margin%)
Initial Margin = Entry Price x Position Size / Leverage
Maintenance Margin = Entry Price x Position Size x Maintenance Margin%

For inverse / coin-based contracts:

Long PnL = (1 / Entry Price - 1 / Exit Price) x Position Size
Long Liquidation Price = Entry Price / (1 + Initial Margin%) x (1 + Maintenance Margin%)
Short PnL = (1 / Exit Price - 1 / Entry Price) x Position Size
Short Liquidation Price = Entry Price / (1 - Initial Margin%) x (1 - Maintenance Margin%)
Initial Margin = 1 / Entry Price x Position Size x (1 / Leverage)
Maintenance Margin = 1 / Entry Price x Position Size x Maintenance Margin%

Liquidation

When a position's current margin rate lowers to the maintenance margin rate (or when the index price reaches the position's liquidation price), the position will be automatically closed(liquidated) by the smart contract, and PnL from this trade will be settled between traders and liquidity providers.

Insurance Fund

YFX uses an Insurance fund to cover systematic losses caused by external factors (like blockchain-related issues) in extreme cases. The Insurance Fund grows from liquidations that were able to be executed at a price better than the bankruptcy price of that position.
To give back to the YFX community, part of the insurance fund will be used to repurchase and burn YFX tokens when it grows to a certain level.
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