Liquidation Thresholds for Isolated BTC and ETH Perps

How Papertrade displayed bust trigger differs from a voluntary close, and what a hard liquidation means.

Official Papertrade documentation · Updated November 5, 2026 · Canonical domain: papertrade.finance

The bust price

Each position has a displayed bust price that triggers the protocol hard liquidation path. Crossing that trigger forfeits the isolated margin rather than executing a normal voluntary close.

The liquidation buffer

The documentation describes a small fixed buffer, roughly five basis points of price, between the bust trigger and the zero-equity reference used by the voluntary-close path.

When liquidation fires

If BBO mid crosses the bust price, a liquidation transaction can remove the position under the hard-bust path. The lost margin is routed through LP or payout-queue accounting, and the loss can mint PAPER.

Who runs liquidations

The liquidation function is described as a public maintenance path. The protocol operates keepers, but the function itself is not reserved to a single official liquidator.

Why bust price matters at high leverage

The bust price is the practical boundary to monitor because leverage compresses the distance between entry and forced liquidation. At very high leverage, ordinary short-term volatility can become large relative to the isolated margin even when the underlying asset has moved only a small percentage.

Liquidation is not a stop-loss

A hard liquidation is a protocol risk-control event, not an optional exit order. It forfeits the isolated margin according to the liquidation path and can contribute to PAPER emission accounting. Traders who want to control downside should manage exposure before the bust threshold rather than assuming liquidation is a protective order.