Auto-deleveraging, abbreviated as ADL, is a risk control mechanism designed to reduce potential negative balance in the market. When liquidation occurs and the insurance fund is insufficient to cover the losses, the ADL mechanism will be triggered. AlphaX makes every effort to avoid such situations. However, due to the high volatility of the cryptocurrency market and the leveraged nature of futures trading, they may still occur.
Once ADL is triggered, liquidated positions are not placed into the order book for market matching. Instead, they are directly matched with higher-ranked counterparty accounts and executed at the current mark price. The ADL mechanism on AlphaX currently applies only to USDT-M perpetual contracts.
1. ADL counterparty ranking logic
The ADL counterparty ranking is determined based on position profit and leverage. Users can view the relevant indicator on the position page. The calculation is as follows:
Profitable positions: ROI * Leverage
Loss positions: ROI / Leverage
Key formulas:
ROI = (Position profit / Position margin) * 100%
Long position profit = (Average close price - Average open price) * Closed size
Short position profit = (Average open price - Average close price) * Closed size
Initial margin = (Opened size * Average open price) / Leverage
Based on the above rules, accounts with higher ROI and higher leverage are ranked higher, and therefore face a greater likelihood of being selected for ADL. Users can monitor their ADL risk in real time via the indicator signals on the position page.
2. Signal lights and risk identification
There are five levels of the signal light, representing your position's ranking among counterparties:
Five lights on: Your position ranks high among counterparties, indicating a very high ADL risk.
One light on: Your position ranks low among counterparties, indicating a lower ADL risk.
3. Notification after ADL execution
Once your position is subject to ADL, you will receive SMS and email notifications with details of the reduced position and fill price. You can also view details in "Orders", where the order type will be marked as ADL.