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Wick Insurance

Last updated: Feb 24, 2026

Wick insurance is a Synthetix-specific protection mechanism that guards against liquidations caused by brief, artificial price spikes (wicks). When a liquidation is triggered by what appears to be a transient price anomaly rather than a sustained market move, wick insurance can temporarily pause the liquidation and block new orders, giving the price time to recover.

How it works

Each subaccount is automatically enrolled in a wick insurance policy with a default configuration. The policy defines:

  • Protection duration — how long protection is active once triggered (in minutes)
  • Exclusion period ratio — the fraction of the protection duration that must pass after a position increase before protection can activate

When a potential wick liquidation is detected on your subaccount:

  1. The system checks whether you are in an exclusion period (see below)
  2. If not, wick insurance activates for your subaccount:
    • New order submissions are blocked for the protection duration
    • Liquidation is paused
  3. If the mark price recovers within the protection window, no liquidation occurs
  4. If the mark price does not recover, the normal liquidation process resumes after protection expires

Exclusion period

The exclusion period prevents traders from immediately claiming protection after increasing a position. This stops the mechanism from being exploited (e.g. opening a large leveraged position and then relying on wick insurance to avoid consequences).

exclusion_duration = protection_duration × exclusion_period_ratio

If you increase your position size, the exclusion clock resets. Protection can only activate once exclusion_duration has elapsed since your last position increase.

Example:
  • Protection duration: 60 minutes
  • Exclusion period ratio: 0.25 (25%)
  • Exclusion duration: 15 minutes

If you add to a BTC long at 10:00, wick insurance cannot activate for that position until 10:15. If a wick occurs at 10:05, your account will be liquidated normally.

What happens during active protection

While wick insurance is active:

  • New orders are blocked — you cannot open, close, or modify positions
  • Liquidation is paused — the engine does not process liquidation for your account
  • Protection expires automatically after the protection duration has elapsed

Once protection expires, the system resumes normal margin checks and liquidation processing.

Limitations

Wick insurance protects against brief price anomalies — it does not protect against sustained adverse price moves. If the mark price remains below your liquidation price after the protection window expires, your position will be liquidated normally.

Protection also cannot activate if:

  • Your account is in the exclusion period following a recent position increase
  • Protection is already active (one active protection at a time per subaccount)

Bankruptcy and ADL

If a liquidation results in a bankruptcy — where collateral is insufficient to close the position at a fair price — the shortfall is covered by Auto-Deleveraging (ADL) of profitable positions on the opposite side of the market. Wick insurance is designed to prevent unnecessary liquidations before they reach the bankruptcy stage.

See also