Can an Exchange Use a Combination of ADL and Socialized Losses?

Yes, an exchange can use a combination of ADL and socialized losses, though it's rare. ADL is the preferred secondary mechanism after the insurance fund is depleted.

Socialized losses would only be implemented if the ADL system itself fails to cover the entire deficit, such as during an unprecedented, catastrophic market event where the scale of bankruptcies overwhelms the capacity of the ADL system to deleverage profitable positions.