Margin and liquidation

In one paragraph: To open a leveraged position you must hold initial margin; to keep it you must hold maintenance margin. Both are computed on chain from your position's notional at the mark price M, not from a leverage slider. If your equity falls below maintenance, you are liquidated. In the general V2 design anyone may liquidate you through the order book, a small penalty is taken, and if the book cannot absorb the loss a funded backstop and then auto-deleveraging of profitable traders cover the rest. In the CMPT-USD open beta liquidation is run by Trion's keeper, which closes the position in full into Trion’s receiver; there is no backstop vault and no ADL for CMPT-USD.

Applies to perpetuals only. Capped-option buyers are never liquidated and writers post full collateral up front. The CMPT-USD perpetual is in open beta on Robinhood Chain; this page describes the beta parameters first, then the general mechanism as designed. See status.

CMPT-USD beta: margin tiers and liquidation

Choose sizing leverage from 1x to 20x in 0.1 steps. The rates apply to marginal tranches, like tax brackets, not to the entire position at one rate. New open interest across all users is admitted up to $500, with an on-chain hard cap of $1,000 and a $2,000 notional cap per account. Caps may change. Funding is off; the mark equals the index. At 20x, about a 1.5% adverse move from entry can bring the position to maintenance and trigger liquidation. Gaps can liquidate at worse prices. If the index feed degrades, new risk pauses and liquidations wait for a fresh normal price.

Liquidation in the beta is operator-run: Trion's keeper detects equity < MM and closes the position in full into Trion’s receiver. It does not close only the smallest slice that restores IM, and it does not depend on other users' resting orders. No ADL queue, backstop vault or slow-mode endpoint is deployed for CMPT-USD, so there is no independent forced-exit path and no second line of loss absorption: if Trion's keeper or matcher is down, positions stay open until they return. See Risks and security.

Equity

equity = trading cash + free cash + unrealized PnL at M

Funding that has accrued but not yet settled is included before any risk decision (in the CMPT-USD beta funding is off, so this term is zero). Equity uses M, never the last trade; in the beta M equals the index.

Initial and maintenance margin

The general V2 "Template A" schedule is marginal, like tax brackets, on notional N with a per-market threshold T:

Under general Template A, MM = IM / 2; small positions get up to 4x leverage and large ones get progressively less. If T is zero, the contract applies the top tier (100% IM) to everything, the fail-closed default. The CMPT-USD pilot does not use Template A: its initial and maintenance rates are the separate marginal rates listed above.

The immutable INDEX_ONLY floor applies to CMPT-USD too: initial margin is at least 50% of notional and maintenance margin is at least 25%. A status change can raise requirements without a price move: a $100 position can go from $5 initial / $3.50 maintenance to $50 initial / $25 maintenance. Separately, the pilot pauses new risk when the index feed degrades, and liquidations wait for a fresh NORMAL price. That pause does not remove the contract's margin floor.

Note: the order form's "Order Value ÷ Leverage" preview is a simplification. The contract's RiskV2.requirements is the binding number.

Worked example (hypothetical)

A hypothetical $300 position spans all three pilot margin tranches:

• First $100: $100 × 5% = $5 of initial margin.

• Next $100: $100 × 20% = $20 of initial margin.

• Remaining $100: $100 × 50% = $50 of initial margin. Total: $5 + $20 + $50 = $75, or 4x overall. Selecting 20x sizing leverage does not override this requirement. At 20x, about a 1.5% adverse move from entry can bring the position to maintenance and trigger liquidation. Gaps can liquidate at worse prices.

Liquidation, step by step

This is the general V2 design. In the CMPT-USD beta only step 1 applies as written; steps 2–7 are replaced by Trion's keeper closing the position in full (no backstop vault, no ADL queue and no permissionless book-first closeout are deployed for CMPT-USD).

1. Trigger. After funding is applied, fresh M gives equity < MM. Equality is not liquidatable. Your risk-increasing orders are cancelled.
2. Book-first closeout. A permissionless caller executes real maker orders inside ±3% of I and ±3% of M, only the smallest slice that restores IM. No depth means no fill; there is never a synthetic fill at the mark.
3. Penalty. min(50 bps × executed notional, your remaining positive equity), paid to the backstop vault. No normal taker fee on top. Whatever equity is left stays with you.
4. Backstop. If the book attempt fails or your equity is below two-thirds of MM, the funded vault may assume the position within its approved cap.
5. Bankruptcy. If losses exceed your cash, the shortfall is debt, covered by real backstop funds.
6. ADL. If the backstop is exhausted, the most profitable, most leveraged opposite positions are reduced at the bankruptcy price, ranked on chain. Losses are clipped to their profit. Flat depositors are never touched.
7. Deficit. If even ADL cannot cover it, a deficit is declared and the market stays in resolution. It is not hidden.

What this does not promise

• No insurance. The backstop is whatever capital was actually deposited; the spec explicitly says an unfunded vault is not insurance. For CMPT-USD no backstop vault is deployed at all.
• No guaranteed exit. In the general design liquidation depends on other users' orders; in the CMPT-USD beta it depends on Trion's keeper being up. Neither is a guarantee.
• No liquidation on a degraded index feed: new risk pauses and liquidations wait for a fresh normal price. Delayed liquidation does not remove gap risk.

Source trail: overdrive/perps/src/v2/RiskV2.sol (_calculateRequirements, evaluate, _computeLiquidationPrice, TEMPLATE_A_*); overdrive/perps/src/v2/CloseoutRouterV2.sol (MAX_PENALTY_BPS, PRICE_BAND_BPS, liquidate, backstop); overdrive/perps/src/v2/BackstopVaultV2.sol; overdrive/perps/src/v2/AdlQueueV2.sol; overdrive/deployments/v2/4663.perps.json (market CMPT-USD: closeoutRouterKind: "operator-eoa", zero adlQueue / backstopVault / slowModeEndpoint); docs/spec/V2_ARCHITECTURE.md §3.6, §6.1; overdrive/perps/script/DeployV2.s.sol.

Repository-owned documentation · October 2026 · Educational material, not investment advice and not an audit.