This article addresses our Global Derivatives offering, which is currently only available to eligible customers in supported regions outside of the U.S. Learn more about Coinbase's Derivatives products
The terms in this article apply to you starting on your effective date under the updated Coinbase Bermuda Limited User Agreement. For most customers, that date is October 1, 2026. If we notified you that your effective date is earlier, these terms apply to you from that earlier date instead.
Deribit uses an incremental auto-liquidation system: as soon as an account doesn't have enough margin balance to maintain its positions, the risk engine closes part of the position. The liquidation engine first tries to liquidate only part of the position(s) to bring the maintenance margin back below 100%. If that's enough, liquidation stops and your remaining positions stay open.
You may receive a margin or liquidation notification, but notifications aren't guaranteed. Liquidation can begin without a margin call and doesn't wait for you to add funds.
Assuming that there is enough market liquidity to make liquidation trades possible, liquidation trades run in real time at one round per second. As soon as the required maintenance margin is lower than the margin balance of the account, liquidation will stop.
During auto-liquidation, you have no control over your account and can't place orders or cancel orders created by the auto-liquidation engine. You regain control only once the maintenance margin requirement falls below 100% of the margin balance. Once the maintenance margin is higher than 100%, reducing your position is solely at Deribit’s discretion — you can't influence this process by placing additional closing orders.
Caution
Accounts that are on Portfolio Margin can have futures positions traded to hedge the deltas of the existing positions, including the opening of new futures positions. If the maintenance margin usage then falls below 100% again and the liquidation has stopped, these hedges will remain open and it is the responsibility of the account holder to manage these positions.
Liquidation trades will have an additional liquidation fee charged to them.
Standard margin liquidations
Caution
Crypto Options bought on Standard Margin can not be liquidated. However, the premium paid on the option plus any positive P&L is locked in the option position and can not be used to cover any position on other instruments. To utilize the P&L of bought options within the rest of the portfolio, portfolio margin is required.
Liquidations on S:SM are confined to the isolated position that doesn't have enough margin. Your other positions are not affected.
For a single position, the liquidation will incrementally close the position while checking with each liquidation trade whether the margin requirements have lowered enough to be covered by the margin balance of the account. Once the margin requirements fall below the margin balance, the liquidation will stop. If the margin balance falls below the maintenance margin requirement again the liquidation process will start again.
In a portfolio with multiple positions the liquidation is a bit more complex and is based on which positions are generating the highest margin usage. Each liquidation is unique, but in general, liquidations onStandard Margin accounts follow the procedures below.
Warning
You have no control over your account during liquidation. Deribit decides how to handle your portfolio for the duration of the liquidation process. See the Coinbase Bermuda Limited (CBBM) user agreement for more information.
Instruments with a settlement currency of USDC.
Positions with the highest maintenance margin will be liquidated first.
There is no preference of futures & perpetual over crypto options.
There is no preference of calls over puts.
There is no preference for expirations.
This process also depends on the availability and liquidity of the instruments that are to be liquidated.
Liquidations X:SM (cross collateral standard margin)
Accounts that are on cross collateral have a similar process for liquidations of the USDC settlement currency in an S:SM account. This is because when cross collateral is enabled, all positions are evaluated in USD.
The whole portfolio of positions will be assessed together, and positions with different settlement currencies will be combined. The maintenance margin will be evaluated in USD.
Positions with the highest maintenance margin will be liquidated first.
There is no preference of futures & perpetual over crypto options.
There is no preference of calls over puts.
There is no preference for expirations.
Cross collateral liquidation rebalancing
Assets that have a haircut applied to the cross collateral contribution can have the relative limit for cross collateral breached prior to any position liquidation, and thus the account can be rebalanced prior to the liquidation.
However, in volatile markets and/or with the use of collateral that does not have a haircut applied, the position will be liquidated prior to rebalancing. This does not mean the position is liquidated while margin is available, but only when the USD margin is insufficient to support the position. The rebalancing after a liquidation is merely an administrative transaction.
A simplified example of rebalancing after a liquidation:
A position is held on an instrument with USDC as settlement currency.
BTC is used as collateral, and the overall account margin balance is in USD.
The account does not have enough USD margin to support the position.
The position is therefore liquidated, in USDC, resulting in a negative USDC margin balance.
The liquidation algorithm will rebalance any BTC to USDC.
If after rebalancing the account still carries a negative USDC balance, the insurance fund may be used to cover the negative equity.
In the incremental liquidation process both liquidation trades and rebalancing can occur at the same time.
Portfolio margin liquidations
Whenever the maintenance margin requirement of an account is higher than 100% of the margin balance, the liquidation process will start. During liquidation, open futures and open crypto options positions can be closed. Unlike in standard margin accounts, in portfolio margin accounts the liquidation process can also include delta hedging via the perpetuals or futures. The goal of the delta hedging is to reduce the delta risk of the account, and this process can include increasing the size of some positions, including opening completely new positions.
Warning
You have no control over your account during liquidation. Deribit decides how to handle your portfolio for the duration of the liquidation process. See the Coinbase Bermuda Limited (CBBM) user agreement for more information.
The liquidation process involves analyzing the risk matrix to find which instrument is contributing the most to the margin requirements, and then liquidating that instrument. If the attempted liquidation order does not trade, then the algorithm will move to the next highest contributing instrument in the risk matrix.
If it is not possible to reduce positions on the relevant instruments, then the liquidation process will then attempt to reduce the risk by delta hedging on the perpetual and/or futures.
Caution
These hedges can remain open after liquidation stops. If you're on Portfolio Margin, Deribit's liquidation engine may trade futures positions — including opening new ones — to hedge the deltas of your existing positions during liquidation. If your maintenance margin usage falls back below 100% and liquidation stops, these hedges stay open, and it's your responsibility to manage them from there.
Liquidations X:PM (cross collateral portfolio margin)
Liquidations on X:PM use the portfolio margin process described above, and because cross collateral is enabled, all positions are evaluated in USD.
The whole portfolio of positions will be assessed together, and positions with different settlement currencies will be combined. The maintenance margin will be evaluated in USD.
Positions with the highest maintenance margin will be liquidated first.
There is no preference of futures & perpetual over crypto options.
There is no preference of calls over puts.
There is no preference for expirations.
Cross collateral liquidation rebalancing
Assets that have a haircut applied to the cross collateral contribution can have the relative limit for cross collateral breached prior to any position liquidation, and thus the account can be rebalanced prior to the liquidation.
However, in volatile markets and/or with the use of collateral that does not have a haircut applied, the position will be liquidated prior to rebalancing. This does not mean the position is liquidated while margin is available, but only when the USD margin is insufficient to support the position. The rebalancing after a liquidation is merely an administrative transaction.
A simplified example of rebalancing after a liquidation:
A position is held on an instrument with USDC as settlement currency.
BTC is used as collateral, and the overall account margin balance is in USD.
The account does not have enough USD margin to support the position.
The position is therefore liquidated, in USDC, resulting in a negative USDC margin balance.
The liquidation algorithm will rebalance any BTC to USDC.
If after rebalancing the account still carries a negative USDC balance, the insurance fund may be used to cover the negative equity.
In the incremental liquidation process both liquidation trades and rebalancing can occur at the same time.