Fees & Liquidations

Trading on leverage can be risky. Make sure you are aware of the liquidation rules outlined below before applying margin.

Fees

Drift currently charges a 10bps taker fee per trade. The fees are calculated on a per trade basis based on notional position size and calculated in the quote asset (USDC), and are taken directly from a user's collateral account.

As an example, if a user takes a notional $10,000 USD position in Drift's SOL-PERP, the trade fee is 0.1% * $10,000 = $10.

Fee

Amount

Taker

0.1% (10 bps)

Liquidations

Below table shows how partial and full liquidations are handled within Drift's system.

Type

Liquidation Margin Ratio / Leverage

% of Positions Closed

Liquidation Penalty

% Given to Liquidators

Partial

6.25% / 16x

25% of all open positions

2.5% of total collateral

50%

Full

5% / 20x

100% of all open positions

All remaining collateral

5%

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Definitions:

  • Liquidation Margin Ratio: The margin ratio of the user's account at which the user will get either partially or fully liquidated. Margin ratio is calculated by total collateral divided by total sum of open positions.
  • % of Positions Closed: The percentage of open positions that will be forcefully closed, or liquidated, at the specified margin ratios.
  • Liquidation Penalty: The percentage of collateral penalty taken from a user's remaining collateral from liquidations. This penalty covers the full fee paid, e.g. a partially liquidated user does not pay a taker fee.
  • % Given to Liquidators: The system's liquidation penalty is split between Drift's Insurance Fund to secure future potential bankruptcies and liquidators who run a bot to crank the liquidations that occur in the system. This is the percentage fees that get paid to third parties who run the liquidator cranker on our platform.

Liquidators are open-sourced and can be triggered by anybody running a liquidator bot. Liquidators will have their collateral reward credited within their Drift account.

Liquidation Price and Margin Ratio Calculation

In normal conditions, our margin ratio calculation uses theortical mark price after closing (Exit Price) to calculate total collateral and the notional sum of open positions (i.e. margin ratio) as the price that liquidations are based on.

In the case of oracle error (Oracles): the market will pause liquidations and funding rate updates.

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