> For the complete documentation index, see [llms.txt](https://docs.xei.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xei.finance/feature-description/liquidation.md).

# Liquidation

## Independent Risk Management Between Trading Pairs 

To support an open margin trading market, we have established isolated pools with targeted risk parameters, tailored to the unique volatility of each asset. Each trading pair is assigned a specific collateral ratio, determined by its inherent volatility and the blockchain's block time and processing capacity.

## Risk Assessment with AMM Prices 

Real-time pricing provided by the on-chain Automated Market Maker (AMM) model is utilized as a benchmark for risk assessment and liquidation. This approach is crucial in accelerating the development of the leveraged trading market in a decentralized environment, especially when compared to the delay in waiting for Chainlink oracles to generate or update market data. The instant price data provided by DEXs, maintained on-chain and secured by both technical and economic measures, has become the standard oracle for various DeFi applications, such as margin trading.

## Operational Restrictions 

To prevent flash loan attacks, multiple restrictions have been implemented in the protocol's design:

* Conducting open, close, or liquidation operations within the same transaction is prohibited. 
* During the liquidation process, [Oracle](/feature-description/oracle.md) ensure the validity of the liquidation price to prevent attackers from manipulating prices to trigger liquidations for profit or to cause cascading liquidation events.


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