Crypto exchange Huobi’s futures trading platform, Huobi DM, has introduced a new “partial” liquidation mechanism.
It gradually reduces a trader’s positions rather than liquidating them in full in a single event. It also includes a circuit breaker function, which halts liquidation when large or unusual price movements are detected.
“We believe our new liquidation feature will have far-reaching benefits for the wider crypto community by helping minimize sudden price movements caused by abnormal liquidation events,” said Ciara Sun, VP of global business at Huobi Group.
Indeed, last week’s brutal liquidations contributed to bitcoin’s crash of over 50%. Some market observers at the time even suggested introducing circuit breakers into the crypto market.
“Today’s price moves in crypto are a strong argument for industry wide circuit breakers. The crypto markets structurally broke today & leading exchanges need to work together to prevent a repeat,” Tushar Jain, managing partner at Multicoin Capital, tweeted last week.
Huobi’s Sun said the exchange’s partial liquidation mechanism would help “minimize the downside without diluting the potential upside.”
Looking ahead, Huobi DM is planning to launch perpetual swaps, including bitcoin swap, with up to 125X leverage. It is also looking to start an over-the-counter loan service and get into options trading.