Auto-Deleveraging (ADL) is a mechanism used to protect against the risk of market slippage. In the event of a forced close-out in the market, if the Risk Guarantee Fund is unable to absorb the losses from a position unwinding, the Auto-Deleveraging mechanism will be triggered.Toobit tries to avoid this situation as much as possible, but due to the high volatility of the digital currency market and the high leverage of the contract market, this situation may still occur.
When ADL is triggered, the platform will no longer use the method of waiting for suitable prices to match orders in the market to process forced liquidation and deleveraging positions for users. Instead, the platform will directly match orders with the accounts that rank the highest in terms of position profits at the current mark price. Currently, the ADL mechanism on Toobit is only used for USDT perpetual contracts.
The ranking of accounts for ADL is based on position profits. Users can see the relevant indicator light icon on the holding page. The formula is as follows:
Gaining position: Profit rate * Leverage
Losing position:Profit rate / Leverage
Profit rate = (Profit / Position margin) * 100%
Long position PnL = (Closing average price - Opening average price) * Closing quantity
Short position PnL = (Opening average price - Closing average price) * Closing quantity
According to the ranking rules, the higher the PnL ratio and the lower the margin ratio of the position, the more likely the account is to be identified as a counterparty for auto-deleveraging. On the page, there is an ADL risk indicator that allows users to track the auto-deleveraging probability. The indicator is designed with 5 grids. When all 5 grids are on, the trader's position is ranked among the highest and the ADL risk is high. When only 1 grid is on, the trader's position is ranked low and the ADL risk is very low.
If and when one of your positions has undergone auto-deleveraging, a message and email will be sent to you to inform you of the position in concern and relevant execution prices. You can also find the details on the Orders page with the transaction labeled as auto-deleveraging.
