Auto-Deleveraging (ADL)

What is ADL

ADL (Auto-Deleveraging) is a risk control mechanism triggered under extreme market conditions when a position is liquidated due to insufficient margin, and the insurance fund is unable to cover the loss of the position. Essentially, the liquidated position will be forcibly matched and offset against positions in the opposite side that are selected through the ADL mechanism, thereby minimizing potential impact on the market and the platform's insurance fund. The core goal of ADL is to maintain market fairness while preserving platform liquidity. Gate prioritizes user trading security and has implemented multiple risk control measures to minimize the likelihood of ADL being triggered. However, due to the volatility and the broad availability of high leverage in the crypto market, all position holders remain subject to a minor risk of ADL.

How ADL works

ADL ranking: A position's ADL rank is determined by its return rate and maintenance margin ratio (MMR). Users can monitor their real-time ADL status through the ADL indicator displayed on each position. The indicator has five bars, and the more bars that are lit, the higher the ranking, and the greater the chance of being selected for ADL.

ADL process: When ADL is triggered, the system selects positions from highest to lowest ranking for deleveraging. Selected users will have their unfilled orders canceled, and positions are forcibly matched with the liquidated position at its bankruptcy price. If a position is only partially deleveraged, the remaining portion is re-ranked for ADL. For details on how the bankruptcy price is calculated, see Estimated Liquidation Price and Bankruptcy Price Calculations.

ADL example

User A holds a 100-contract long position and ranks highest in the ADL queue. At the same time, User B's 100-contract short position is liquidated, and neither the market nor the insurance fund is able to cover the loss. As a result, 100 contracts need to be deleveraged through ADL. Since User A's position ranks the highest, the system will select 100 contracts from their long position and forcibly match them with User B's short position at the bankruptcy price of User B's position, completing the ADL process.

ADL trigger conditions

ADL is a risk-management measure triggered mainly during extreme market conditions or force majeure events when the insurance fund cannot cover bankrupt positions.

ADL ranking rules

In the isolated margin mode (Classic Futures Account, Unified Account Single-Currency Margin Mode or Multi-Currency Margin Mode) For profitable positions: Ranking Score = Return % / MMR For losing positions: Ranking Score = Return % × MMR

In the cross margin mode (Classic Futures Account, Unified Account Single-Currency Margin Mode, Multi-Currency Margin Mode or Portfolio Margin Mode) For profitable positions: Ranking Score = Return % / MMR For losing positions: Ranking Score = Return % × MMR

Return % (Long) = (Mark Price – Avg. Entry Price) / Avg. Entry Price Return % (Short) = (Avg. Entry Price – Mark Price) / Avg. Entry Price

Tips: The ADL system prioritizes profitable positions over losing ones. Even though losing positions have negative returns, they still participate in the ADL ranking and may be selected for ADL. Positions with MMR below 100% (i.e., those being liquidated) are not included in the ADL ranking.

ADL ranking & indicator lights

Assume there are three long isolated-margin positions in the market, with the following parameters:

The ADL ranking scores of the three positions are: Ranking Score (A) = 200% / 120% ≈ 1.6667 Ranking Score (B) = (-50%) × 200% = -1 Ranking Score (C) = 150% / 150% = 1 Ranking Score (A) > Ranking Score (C) > Ranking Score (B), so the position order is: A (8 contracts) → C (6 contracts) → B (12 contracts) Total long position size: 8 + 6 + 12 = 26 contracts The ADL indicator divides these into 5 segments. Each segment = 26 / 5 = 5.2 contracts

Position A (8 contracts) spans Segment 1 and 2, starting in Segment 1, and has 5 bars are lit. Position C (6 contracts) spans Segment 2 and 3, starting in Segment 2, and has 4 bars are lit. Position B (12 contracts) spans Segment 3, 4, and 5, starting in Segment 3, and has 3 bars are lit.

Notes

While ADL risk cannot be fully eliminated, users can reduce the likelihood of their positions being selected for ADL by: • Monitoring the ADL indicator: Stay aware of the position's ranking and adjust accordingly. • Adding margin: Increase the margin to raise the MMR, which can lower the ADL rank and reduce the risk of being auto-deleveraged.

Market conditions can be highly unpredictable. Users who rely on hedging or neutral strategies should pay particular attention to the potential impact of ADL. Once ADL is triggered, part of your position may be reduced, which can alter your exposure and increase portfolio risk. We recommend monitoring the ADL indicator and any position changes closely, adjusting your strategy as needed, and maintaining proper risk controls.

After an ADL event is executed, the system will normally send a notification. However, during extreme market conditions, delivery may be delayed. Such delays do not affect the actual execution of ADL. We recommend monitoring your account and open positions directly on the platform to manage risk in a timely manner.

Thank you for your understanding and support. For further assistance, please visit the Gate official support page or contact our customer service team. Gate reserves the final right of interpretation for this product.