Can a Trader Be Liquidated and ADL'd Simultaneously? ⎊ Path

Can a Trader Be Liquidated and ADL’d Simultaneously?

No, a trader cannot be liquidated and ADL'd simultaneously. Liquidation is the first step, triggered by the trader's insufficient margin.

ADL is a secondary, platform-wide mechanism triggered only after a liquidation has failed to cover its deficit and the insurance fund has been depleted. A trader is either liquidated due to their own risk, or ADL'd due to a system-wide deficit.

What Happens If an Insurance Fund Runs a Significant Deficit?

What Is a “Margin Call” and When Is It Triggered in the MTM Process?

What Is a ‘Margin Call’ and How Is It Triggered by the Mark-to-Market Process?

When Does the Insurance Fund Step in during Liquidation?

When Does ADL Occur in the Liquidation Process?

Is a Trader Liable for the Deficit If the Insurance Fund Is Also Depleted?

What Is ‘Auto-Deleveraging’ (ADL) and When Is It Triggered on a Derivatives Exchange?

What Is a “Maintenance Margin” and When Is It Triggered for an Options Seller?

Glossar

Insurance Fund

Fund ⎊ In the context of cryptocurrency derivatives, options trading, and financial engineering, an Insurance Fund represents a dedicated pool of assets designed to mitigate systemic risk within a specific protocol or trading environment.