Skip to main content

How Does the Exchange Determine the Size of the Position to Be Deleveraged?

The exchange calculates the exact deficit that needs to be covered by the ADL system. It then determines the smallest reduction in the most highly-ranked profitable position that is sufficient to cover that deficit.

The system aims to deleverage the minimum necessary amount to return the insurance fund to a healthy level or cover the immediate shortfall.

How Does a Trader’s Position Size Influence Their ADL Ranking?
What Criteria Determine Which Profitable Traders Are Selected for ADL?
How Does an Exchange’s Risk Engine Determine the Appropriate Size for an ADL Event?
How Is Determinism Important for Calculating Option Payoff in a Smart Contract?