Explain the Difference between ‘Liquidation’ and ‘Auto-Deleveraging’

Liquidation is the forced closure of an under-collateralized position whose margin has dropped below the maintenance level. It is a direct result of a trader's own losses.

Auto-deleveraging (ADL) is the forced reduction of a profitable, well-collateralized position to cover a deficit left by an unsuccessful liquidation that the insurance fund could not cover. Liquidation is a first-line defense; ADL is a last resort.