What Is Auto-Deleveraging (ADL)?
What Is Auto-Deleveraging (ADL)?
Auto-Deleveraging (ADL) is a risk-control mechanism used in perpetual futures. When extreme market volatility causes a liquidation order to fail due to insufficient liquidity, the system may automatically reduce or close positions from traders on the profitable opposite side to maintain overall market stability.In simple terms: 👉 ADL occurs when the system must reduce profitable positions to offset losses caused by liquidations that cannot be fully executed.
Why Does ADL Exist?
Normally, when a user’s position is liquidated and their account goes negative, the platform’s Insurance Fund absorbs the loss.However, during extreme volatility, the insurance fund may not be sufficient.When this happens, ADL is triggered to prevent further systemic risk.In such cases, the system reduces positions from opposing traders whose positions are ranked highest based on leverage and profit.
Which Positions Are Most Likely to Be Deleveraged?
ADL is not random — positions are ranked and processed based on:
Leverage (higher leverage = higher priority for ADL)
Unrealized PnL percentage (higher profit = higher priority)
Position size
Summary: 👉 High-leverage + high-profit positions have the greatest chance of being auto-deleveraged.
What Happens When ADL Is Triggered?
If your position is selected for ADL:
The system will close part or all of your position
The execution is done at the Index Price or a fair price, not via the order book
No additional fees are charged
The process is fully automatic and does not require user action
ADL is a risk-protection mechanism, not a penalty
How to Reduce Your ADL Risk
You can lower the likelihood of being auto-deleveraged by:
Reducing your leverage
Maintaining moderate position sizes
Avoiding high-leverage profitable positions during extreme volatility
Taking profits early to prevent your position from ranking high in the ADL queue
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