REKT

In simple terms

Getting rekt means you lost a lot of money on a cryptocurrency trade or investment, usually quickly and unexpectedly. It's like betting your savings on a horse race and watching your horse stumble at the finish line.

Definition

Suffering major losses on a trade or investment.

In depth

Rekt describes a trader or investor who has experienced severe financial losses, typically through leveraged positions, liquidations, or poor market timing. This occurs when a trader's collateral falls below maintenance requirements on margin accounts, triggering automated liquidations by exchanges or decentralized protocols. The term also applies to those holding assets during sharp market downturns or rug pulls, where the underlying asset's price crashes due to market manipulation, unfavorable consensus changes, or protocol vulnerabilities.

How does REKT work?

The word is a phonetic spelling of "wrecked" and describes a large, usually sudden loss. Most cases follow a small number of mechanisms. With leverage, an exchange requires collateral to stay above a maintenance level; when price moves against the position and margin falls below it, the position is force-closed and that collateral is gone. Lending protocols do the same automatically: once a loan's collateral ratio crosses a threshold, anyone can repay the debt and claim the collateral plus a bonus. The other common routes are a token losing nearly all value and a wallet drained through an approval.

An example

Someone opens a $10,000 position using $1,000 of their own funds at 10x leverage. A 10% move against the position erases that $1,000, and the exchange usually liquidates before the loss reaches that point. So a price fall from $100 to roughly $91 ends the position. Leverage multiplies losses as much as gains, and losing the entire deposited margin is an ordinary outcome. Illustrative figures.

Figures are illustrative only.

What beginners get wrong

• Treating leverage as a way to commit less money, when it mainly shortens the price move needed to lose the whole deposit.
• Maintenance margin is easy to overlook, so a position can close earlier than arithmetic on the entry price suggests.
• Leaving unlimited token approvals active after using a site once, since a later exploit of that contract can drain the wallet.
• Adding collateral to a losing leveraged position to delay liquidation, which increases the amount at risk rather than reducing it.

Related terms

• Liquidation
• Leverage
• Margin
• Capital Loss
• Squeeze
• NGMI

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