What Is a Liquidation Fee? How Much Exchanges Charge
How liquidation fees work on perpetual futures exchanges, how much each platform charges, and how insurance funds and ADL protect the system.
Updated
A liquidation fee is a charge taken when your trade is force-closed. It kicks in when your margin can no longer cover your losses. It is not the same as a normal trading fee. The exchange takes it at the moment of close.
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Why It Exists
Exchanges do not close bad positions out of goodwill. Closing a large trade in a fast market is risky. The fee covers that cost and fills the exchange's insurance pool. That pool covers gaps when the engine can't close your trade at the break-even price.
What Exchanges Actually Charge
Fees vary more than most traders expect:
| Venue | Liquidation fee | Where it goes |
|---|---|---|
| Binance | ~0.5% of position size at close | Insurance fund (over $1B) |
| Bybit | 0.5-1.5% of remaining margin, by tier and mode | Insurance fund |
| OKX | Similar to Binance | Insurance fund |
| Hyperliquid | Taker fee rate at close, no fixed penalty | HLP vault |
On most centralized exchanges, the fee is 0.5-1.5% of remaining margin at close. It is based on what is left, not your full original size.
Insurance Funds and ADL
When your trade is closed, the exchange takes over. It tries to close it in the market. If the fill price is worse than your break-even price, the insurance fund covers the gap.
If the fund runs dry (rare, but it happened on early BitMEX), the exchange triggers ADL (Auto-Deleveraging). The most profitable traders on the other side get their trades partly closed. They absorb your loss. Most traders never see ADL. But it is why some platforms show an ADL alert on open trades.
DEX Liquidations Work Differently
On pool-based DEXes like GMX and Jupiter, fees go to liquidity providers (LPs). Those LPs take the other side of all trades. On Hyperliquid, the fee goes to the HLP vault. There is no central fund. The LP pool takes the risk instead.
How to Avoid Paying It
Set a stop-loss well above your close-out price. A stop at 5% loss on a 10x trade costs you 50% of your margin. That stings, but it beats a full wipe plus a fee on top. The full defensive playbook is in how to avoid liquidation, and you can watch forced closures happen in real time on the liquidation tracker.
Is the liquidation fee charged on top of my lost margin?+
Yes. Liquidation means your margin absorbs the loss and the fee is deducted during the forced close, which is why the payout that survives a liquidation is usually near zero.
Do DEXes charge lower liquidation fees than CEXes?+
Often. Hyperliquid charges its normal taker rate rather than a 0.5%-plus penalty, and pool-based venues like GMX route a fixed dollar-denominated fee to keepers and LPs. The bigger difference is where the money goes: LP vaults instead of an exchange insurance fund.
What is auto-deleveraging (ADL)?+
The backstop behind the insurance fund. If a forced close fills so badly the fund cannot cover the gap, the venue trims the most profitable opposing positions to balance the books. Rare on major venues, but it is why some platforms show an ADL indicator on open trades.
PerpFinder Research
Editorial TeamEditorial team tracking 30+ perpetual futures venues with live on-chain and exchange data.
Risk Warning: Trading perpetual futures involves substantial risk of loss and is not suitable for all investors. Past performance does not guarantee future results. Only trade with funds you can afford to lose.