📘Closing Trades

There is no closing fee for non-liquidated trades. However, when a position is liquidated, the remaining collateral is collected and accrues as a reward for Market Making Vault Liquidity Providers.

Not Liquidated

Manually closed or Automations-triggered (Take Profit, Stop Loss) trades can be triggered when positions have a negative or positive trader PnL.

• Negative trader PnL: Triggered by either a manual close or a Stop Loss reaching the designated value. A trader's collateral + PnL is transferred back to the trader's wallet (i.e. collateral - losses). The absolute value of the trader's negative PnL (remaining collateral) is transferred to the protocol's Liquidity Buffer.

• Positive trader PnL: Triggered by either a manual close or a Take Profit reaching the designated value. A trader's initial collateral + positive PnL (from Liquidity Buffer) is transferred back to the trader's wallet.

No Closing Fee

Ostium's trading engine does not have a closing fee.

Why? Most exchanges display a misleading unrealized PnL value for traders. While a trader may believe themselves to be in profit, dynamic closing fees and hefty spreads often result in positions closing with meaningfully lower gains than a reading of the interface would suggest (the case for a majority of perpetuals protocols today).

Instead, on Ostium, what you see is what you get: the value of a trader's unrealized PnL represents the their would-be realized PnL if the trader were to close the open position at market price. This increases transparency and removes the poor user experience of unpredictability resulting from the gap between displayed unrealized and actual realized PnL.

Liquidation

When a trader uses leverage, the actual position size is larger than the collateral used to open the position. As a result, there exists a price at which a trader's losses equal the initial collateral used to open the position, at which a trader must be liquidated. However, due to asset volatility (particularly with high leverage), execution time, and potential price feed latency, liquidations must occur before collateral value (- PnL) has declined to zero, instead occurring when collateral value has fallen to 10% of original collateral deposited.

Keeper bots deployed via Chainlink Automations for Chainlink crypto feeds or Gelato Functions for Ostium's RWA feeds are set to trigger liquidation when the value of a trader's collateral has decreased by 90%. The remaining collateral (10%) is transferred to the Market Making Vault (liquidation reward).

Unlike in protocols where liquidator bots require direct incentivization on a per-liquidation basis by allocating a portion of trader collateral to bot rewards, Ostium's integration with external network-operated liquidation bots (Chainlink Automations and Gelato Functions) means there is no need to allocate additional rewards to incentivize liquidation at a protocol level. The fee required to pay these Automations to monitor the need for and trigger liquidations is already collected at the opening through the oracle fee.

Liquidation Reward (fee)

The liquidation reward is charged to the trader's remaining collateral in the event of a liquidation and routed to Market Making Vault.

Traders do not receive the remaining collateral if their position is liquidated.