Huobi Group’s derivatives exchange platform, Huobi DM has rolled out a new circuit breaker to avoid liquidation feature on its platform. According to the announcement made on March 18, the crypto derivatives exchange firm introduced the new features to help manage risk on its platform.
In addition, the new features added include a new partial liquidation function that constantly reduces a user’s position rather than liquidating it at once. As per the announcement, the added features will deliver a “safe, secure, and reliable trading platform.”
Moving forward, the announcement claims the new functions will automatically commence liquidating a position in bits at pre-decided ratios resolved by a calculated vulnerability. Additionally, the task comprises a circuit breaker to avoid liquidations. The circuit breaker ceases the liquidation process when the system perceives large or abnormal digression between the liquidation price and the market price.
Circuit breaker to avoid liquidations protects users from risky situations
The Vice President of Global Business at Huobi Group, Ciara Sun highlighted that if the correct actions are not offered to safeguard users, the high volatility levels of derivatives markets could lead to ““unnecessarily high-risk circumstances”. She states:
“Our goal is to safeguard our users’ assets while providing a robust trading experience, so we’re using this partial liquidation mechanism to minimize the downside without diluting the potential upside.”
Additionally, the newly integrated features will not attract additional fees according to the announcement. The circuit breaker to avoid liquidation mechanism will be pertinent to all digital currencies and leverages that are supported in the platform. In addition, Huobi DM,s maintenance margin ratio is subject to reduction. This refers to a significant market liquidation indicator.
Crypto world happy with the significant addition
The integration of the new features was positively received within the digital currency industry. Some members of the cryptocurrency ecosystem admitted that the roll out of circuit breakers to avoid liquidation was significant and advantageous.