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Gate.io > Help Center > Futures > Logical Mechanism of Perpetual Contracts
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Instructions of Auto-Deleveraging (ADL)
Gate.io
Updated at:58 days 12 hours ago
lv

In the event of liquidation, if the insurance funding is not sufficient for the liquidation order, the auto-deleveraging system will be enabled. The ADL system will automatically deleverage an opposing position from a selected trader with the highest profit in order to eat up the pending liquidation order.

ADL Mark:

img

(The indicator light shows your position at the automatic liquidation queue. If all lights are on, your position is likely to be reduced in the event of liquidation. )

Note:

1)User with more lights up on the indicator and higher ranking is more likely to deleverage. 2)Profit ranking refers to only the opening price, instead of the leverage and position. 3)If a user experienced ADL, all pending orders will be canceled. 4)To avoid ADL, users can close a position and then open another one.

For example:

A user opens a long contract position with 10,000BTC-USDT on 50x leverage, and the liquidation price is 9,000USDT. Assuming that the bankruptcy price is 8,500USDT, when the market volatility affects the mark price, which has triggered the liquidation price and caused the liquidation of the position, then place the order at the bankruptcy price, that place the order at 8,500USDT.

If it's unable to place the order at the bankruptcy price, which is 8,500USDT, and the insurance fund is insufficient to absorb the loss, then the ADL system will automatically deleverage.

With the assumption that there are 5 opposing short positions with profits in the current trading pair:

User A, 100 short positions, profit ranking at top 10%, 5 lights on the indicator;

User B, 200 short positions, profit ranking at top 30%, 4 lights on the indicator;

User C, 50 short positions, profit ranking at top 50%, 3 lights on the indicator;

User D, 150 short positions, profit ranking at top 80%, 2 lights on the indicator;

User E, 400 short positions, profit ranking at top 100%, 1 lights on the indicator;

If there are 350 positions facing liquidation, then Buser A, B, C will be selected, that the traders with the highest rankings in the system is prioritized and selected to deleverage first and to fill all contract at the bankruptcy price.

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