ADL Mechanism
In forced liquidation scenarios, if the insurance fund is insufficient to cover losses from liquidation orders, the Automatic Deleverage (ADL) system is activated. ADL selects positions from users holding opposite positions with the highest profits to offset unexecuted liquidation orders. Profit rankings are determined by Unrealized PnL × Leverage (Note: For cross-margin users without a set leverage limit, the maximum leverage of the position is used).
Users selected for ADL will have all unexecuted orders canceled prior to deleveraging.
ADL Overview
Automatic Deleverage (ADL) is a risk control mechanism used in extreme circumstances. When a position triggers forced liquidation due to insufficient margin and the insurance fund cannot fully absorb the resulting losses, ADL is initiated to forcibly reduce profitable positions, ensuring platform solvency and market fairness. ADEN employs multiple protective measures to minimize the need for ADL.
Trigger Logic
A user’s position enters forced liquidation due to insufficient margin.
The insurance fund cannot cover the negative balance losses.
The system activates ADL.
Example:
Insurance Fund Balance: 10,000 USDT
Total liquidation losses from multiple users: 11,000 USDT
Shortfall: 1,000 USDT
Result: The system triggers ADL to cover the shortfall.
Execution Process
The system selects profitable positions for deleveraging based on their ranking.
All unexecuted orders for selected accounts are canceled.
If a position is not fully offset, the remaining portion is re-entered into the ADL ranking for further processing.
ADEN minimizes ADL frequency and impact through an optimized risk engine and deep liquidity infrastructure. When ADL is triggered, the system processes positions in ranking order, canceling unexecuted orders and matching selected positions with liquidation orders at the counterparty’s bankruptcy price. Any remaining position not fully deleveraged re-enters the ADL ranking.
While ADL may affect profitable traders, it is a critical safeguard for ensuring platform stability and long-term reliability.ADEN is committed to reducing ADL occurrences and their impact through advanced risk management and robust liquidity design.
Ranking Rules
Isolated Margin Mode (Classic Account / Unified Single-Currency / Cross-Currency)
Profitable Positions: Position Yield ÷ Position Maintenance Margin Rate
Loss-Making Positions: Position Yield × Position Maintenance Margin Rate
Cross-Margin Mode (Classic Account / Unified Single-Currency / Cross-Currency / Portfolio Margin)
Profitable Positions: Position Yield ÷ Account Maintenance Margin Rate
Loss-Making Positions: Position Yield × Account Maintenance Margin Rate
Position Yield Calculation
Long Position: (Mark Price - Entry Price) ÷ Entry Price
Short Position: (Entry Price - Mark Price) ÷ Entry Price
Rule Restrictions
Positions with a Maintenance Margin Rate < 100% (i.e., already in liquidation) are excluded from ADL ranking.
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