Auto-deleveraging(ADL)

What is Auto-delveraging and how does it work?

When a trader's position is liquidated, the liquidation engine takes over the position. If the liquidation order cannot be filled at the bankruptcy price and the insurance funds run out, the ADL system automatically deleverages opposing traders' positions based on profit and leverage priority.

All orders at risk of ADL will be placed in a queue. The priority ranking of a trader's position is calculated based on both profit and leverage, with more profitable and higher-leveraged traders being deleveraged first. The priority formula is:

$$Ranking = PnL Percentage\times Effective Leverage$$

Where:

• $PnL Percentage = Unrealized PnL Percentage (ROI)$
• $Effective Leverage = \frac{Mark Value}{abs (Mark Value - Bankrupt Value) }$
• $Mark Value$= Position Value at Mark Price
• $Bankrupt Value$= Position Value at Bankruptcy Price

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