What is ADL?
Auto-Deleveraging (ADL) is a risk management mechanism designed to protect the risk reserve fund. It is a forced liquidation mechanism for counterparties, triggered when extreme market conditions or unforeseen factors lead to the depletion or rapid decline of the risk reserve fund. ADL is the final step in the liquidation process and occurs only in extreme scenarios.
ADL Trigger Conditions:
- The risk reserve fund is completely depleted.
- For BTCUSDT/ETHUSDT pairs, the available risk reserve fund drops sharply by 50% from its peak; for other pairs, the drop is 20%.
- In extreme market conditions, liquidity becomes severely insufficient, making it impossible to effectively reduce liquidated positions in the market.
ADL Counterparty Ranking:
ADL counterparty ranking is determined based on account or position risk and the profitability of the contract position. The ranking follows these rules:
- Positions are ranked from highest to lowest based on their return rate, with profitable positions ranked ahead of losing positions.
Position return rate calculation:
Position Return Rate = Unrealized P&L / Initial Margin
- If the position return rate is negative or the position is undergoing liquidation/reduction, its return rate is considered 0.
- Users with higher profits and higher leverage are more likely to be selected as ADL counterparties and face the risk of auto-deleveraging.
Users can monitor their ADL risk in real time through a five-level indicator.
- If all five levels are lit, the position ranks high among counterparties, indicating a higher risk of ADL.
- If only one level is lit, the position ranks lower, meaning the risk of ADL is relatively low.
There will be no warning before ADL occurs, but affected users will receive an email notification once ADL is triggered.
How Can I Avoid ADL Affecting My Positions?
BitMart’s risk management engine selects positions subject to ADL based on multiple factors, including profitability, losses, and leverage. While it is impossible to eliminate the risk of ADL entirely, lowering leverage can reduce the likelihood of your position being affected.
