> For the complete documentation index, see [llms.txt](https://references.everstrike.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://references.everstrike.io/trading/liquidity-providers.md).

# Liquidity Providers

Liquidity Providers can take over positions when incremental liquidation fails. This helps manage positions during insufficient liquidity or rapid price moves.

Read [Liquidation](/trading/liquidation.md) for the standard liquidation process. Read [Margin Requirements](/trading/margin-requirements.md) for maintenance-margin rules.

### When liquidation can fail

Liquidation can fail in either of these conditions:

* **Insufficient liquidity:** The market cannot fill a liquidation order.
* **Fast-moving markets:** The Mark Price reaches bankruptcy before liquidation completes.

When this happens, the position can transfer to a Liquidity Provider. A provider takes over the position at its Bankruptcy Price. This gives the provider time to hedge the acquired exposure.

### Price thresholds

These thresholds use the contract's Mark Price.

#### Liquidation Price

The Liquidation Price is where a position enters liquidation. At this price, Gross Position Margin falls below the Minimum Maintenance Margin requirement.

#### Failure Price

The Failure Price is where liquidation is considered failed. At this price, the position's Gross Position Margin equals 50% of its Minimum Maintenance Margin requirement.

#### Bankruptcy Price

The Bankruptcy Price is where the position's Gross Position Margin reaches zero. A Liquidity Provider takes over the position at this price.

### Price thresholds and outcomes

For a long position:

1. Liquidation starts when the Mark Price drops below the Liquidation Price.
2. The system attempts to reduce the position incrementally.
3. If the Mark Price recovers, the position can exit liquidation.
4. If the Mark Price reaches the Failure Price, liquidation has failed.
5. A Liquidity Provider can take over the position at the Bankruptcy Price.

For a short position, the same thresholds apply in the opposite price direction.

### Cross Margin

With Cross Margin, the risk system manages Gross Position Margin for each position automatically. Positions become subject to liquidation only when account-wide Gross Position Margin falls below the account-wide Minimum Maintenance Margin requirement.

### If no provider takes over

If liquidation fails and no Liquidity Provider takes over, Everstrike can initiate a [Deleverage Event](/trading/deleverage-events.md).