How Does High Volatility Impact the Risk of ADL?

High market volatility significantly increases the risk of auto-deleveraging (ADL). Rapid price movements make it more likely that a liquidated position cannot be closed quickly at a favorable price, leading to a larger deficit.

This larger deficit is more likely to deplete the insurance fund, forcing the exchange to resort to the ADL mechanism to cover the remaining losses. Volatility accelerates margin depletion.