Liquidation and delivery

In the context of cryptocurrency, liquidation、(liquidation/collapse) and (delivery/settlement) are terms related to derivative trading, each with its own meaning and operational procedures.

Liquidation refers to the forced liquidation action taken by exchanges or platforms when a trader's margin account is insufficient to meet the maintenance margin requirements. The exchange automatically closes the trader's positions at the market price to protect the interests of the exchange and other traders. Liquidation typically occurs during significant market volatility, insufficient margin, or when risk control objectives are triggered.

Liquidation/Collapse occurs when a trader's positions incur significant losses, causing their margin account balance to drop to zero or negative. This is usually due to intense market volatility or the trader's failure to timely add more margin. Liquidation/collapse results in the forced closure of the trader's positions and may lead to additional losses.

Delivery/Settlement refers to the actual delivery of assets between parties according to the contract terms upon its expiration. In cryptocurrency derivative trading, delivery can be physical (i.e., actual delivery of cryptocurrencies) or cash settlement (i