Is the ADL Process Transparent to the Affected Trader?
The ADL process is generally transparent in terms of notification. The exchange informs the trader that their position has been closed due to ADL and provides the price at which it was closed.
However, the exact mechanics of the ranking algorithm and the specific deficit that triggered the ADL are typically proprietary and not fully disclosed to the public.
Glossar
ADL Process
Algorithm ⎊ The Auto-Deleveraging (ADL) process represents a critical risk management protocol employed by certain crypto derivatives exchanges.
Ranking Algorithm
Algorithm ⎊ Within cryptocurrency derivatives, options trading, and financial derivatives, a ranking algorithm represents a formalized process for prioritizing assets, strategies, or counterparties based on a defined set of quantitative criteria.
Transparent
Disclosure ⎊ Transparency within cryptocurrency, options trading, and financial derivatives centers on the readily available and verifiable information regarding market participants, order book dynamics, and the underlying mechanisms governing price discovery.