Binance Updates Liquidation Fees: What Traders Need to Know (2024-08-12)

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Cryptocurrency exchange Binance has announced significant changes to its liquidation fee structure, effective August 12, 2024, at 06:00 UTC. These updates aim to enhance user protection and ensure market stability.

• Cross Margin: Fee remains unchanged at 2% of liquidated assets.
• Cross Margin Pro: Fee increase from 2% to 3% of liquidated assets.
• Isolated Margin: Transition from a multi-tier system to a fixed rate of 2% of liquidated assets.

These changes could significantly impact traders' strategies, especially those actively using margin trading on the Binance platform. Traders should consider these changes when planning their strategies for the period after August 12, 2024.

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Margin Trading - Trading using borrowed funds, allowing traders to increase position size and potential profit.

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• Each leverage (position) has its own margin.
• Losses on one position do not affect the rest of your account.
• If the balance of a position reaches zero, it is automatically liquidated.

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• All funds in your margin account are used to maintain all your positions.
• Reduces the risk of liquidation for individual positions.
• Increases the risk for the entire account.

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1. Transfer: Move assets to the margin account.

2. Borrow: Choose an asset to borrow.

3. Trade: Start trading on the margin trading page.

4. Repay: Return borrowed funds.

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The margin insurance fund covers losses when:

• The capital in the margin account becomes negative.
• The user cannot repay the crypto loan.

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• The platform invests liquidation fees and part of the income from margin trading and crypto loans into the insurance fund.
• This fee is displayed in the liquidation fee history on the margin account.
• The user's liquidation price will not change as a result of these fees.

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• Navigate to: [Wallet] > [Margin Wallet] > [More Data] > [Insurance Fund]
• Or use the link: Binance Insurance Fund

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• Borrow funds to sell an asset you don't own, intending to buy it back later at a lower price.
• Profit from the difference if the price falls, minus fees.
• High risk and requires careful market analysis and risk management.

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1. Asset selection: Decide that the price of Bitcoin (BTC) (current price $50,000) will decrease.
2. Opening a short position: Borrow 0.1 BTC and sell it at $50,000, receiving $5,000.
3. Waiting for price decrease: The price falls to $45,000.
4. Closing the position: Buy 0.1 BTC at $45,000, spending $4,500.
5. Returning the cryptocurrency and calculating profit: Return 0.1 BTC to the exchange. Profit is $500 ($5,000 - $4,500).

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• Borrow funds to buy an asset expecting its price to rise.
• Profit from the difference if the price increases, minus fees.
• Involves high risk and requires careful market analysis and risk management.

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1. Asset selection: Decide that the price of Bitcoin (BTC) (current price $50,000) will increase.
2. Opening a long position: Borrow $10,000 and buy 0.2 BTC at $50,000, spending $10,000.
3. Waiting for price increase: The price rises to $55,000.
4. Closing the position: Sell 0.2 BTC at $55,000, receiving $11,000.
5. Repaying the loan and calculating profit: Return $10,000 to the exchange. Profit is $1,000 ($11,000 - $10,000).

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