The risk engine is the software service inside an exchange that continuously values open positions, checks them against margin requirements, and executes forced liquidations. It has no discretion. It runs the same checks for every account on every tick of mark price, and its speed is the reason liquidations arrive in bursts, never one by one.
01What it actually does
The loop is simple to describe. Value every open position at mark price. For each account, compare equity with the sum of maintenance requirements, adjusted for the size tiers of its positions. For accounts that fail, take over positions and submit closing orders, attempting partial reduction first where the tier schedule allows. Repeat.
Around that loop sit the tier schedules, maximum leverage caps, and in some engines graduated responses like margin top-up requirements for institutional accounts. The schedules are published, and the engine enforces them mechanically.
02Why it matters for reading data
Because one engine triggers many positions on one mark price tick, liquidation events in a cascade arrive nearly simultaneously, then in bursts as further ticks fail more accounts. That burst structure is visible in our recorded feed, and it distinguishes genuine cascades from slow grinding deleveraging, where events trickle over hours instead.