Auto-Deleveraging (ADL)

Most positions end one of two ways: you close them, or they are liquidated because losses reached the pair's Liquidation Loss Rate.

Auto-deleveraging (ADL) is the third way. It is the protocol's risk-control keeper closing a position for reasons that have nothing to do with how much that position has lost — the market it trades is being retired, or the position has stopped behaving like a leveraged position at all. For how it sits alongside every other limit the protocol enforces, see Risk Controls.

ADL is not a penalty and it is not a liquidation. Your PnL is settled at the prevailing oracle price and your remaining collateral is returned, exactly as if you had closed the position yourself.

How to tell them apart

Liquidation is driven by your position's losses. ADL is driven by the market's state or by the position's structure. In your trade history, an ADL close is recorded with execution type ADL.

When ADL triggers

A market is retired

When a trading pair is moved to a closed status, the protocol stops supporting new risk on it. Open positions on that pair are wound down rather than left in a market that no longer has an active oracle feed, funding, or an OI cap being maintained.

Positions on a retired pair are eligible for ADL when their leverage is either 9x or above or below 1x — the two ends where leaving the position open carries the most risk for the trader and for the protocol.

Leverage falls below 1x

A position is below 1x when the USD value of its collateral exceeds the notional size of the position. At that point it is no longer a leveraged trade: the collateral locked against it is larger than the exposure it buys.

This happens most often on AnyCollateral positions, where the collateral token can rally hard while the position itself barely moves — see Sub-1x Force-Close. It can also happen after adding a large amount of margin.

The protocol closes these positions and returns the collateral so it can be redeployed.

Leverage-based ADL applies to positions opened the same day

The 9x and sub-1x checks only consider positions opened on the current UTC day. A position opened on a previous day is not auto-deleveraged on leverage grounds — but it is still subject to normal liquidation, and it can still be closed if its market is retired.

What you receive

ADL settles the position on the same path as a normal close:

• PnL is realised at the prevailing oracle price.
• Close, holding, and funding fees are deducted from collateral.
• The remainder is returned to your wallet in the position's settlement token.

There is no ADL-specific fee and no additional loss beyond the fees the position had already accrued.

How to avoid it

ADL on a retired market is not avoidable — the pair is being withdrawn, and the only alternative is closing the position yourself before it happens.

Sub-1x ADL is entirely under your control:

• Do not over-collateralise. Adding margin far beyond what the position needs pushes effective leverage toward 1x.
• If you use a volatile token as collateral, watch its price as well as the position's. A collateral rally lowers effective leverage the same way adding margin does.
• Remove collateral instead of letting the position drift below 1x — see Managing Collateral.