Why Is the ADL System a Requirement for Highly Leveraged Trading Platforms?

The ADL system is a necessary evil for platforms offering high leverage. High leverage inherently increases the risk of negative balances, which the insurance fund may not always cover.

ADL acts as the final safety net to ensure the exchange's solvency and guarantee that profitable traders receive their due, even if it means closing some of their positions. Without ADL, the exchange would either have to lower leverage significantly or risk bankruptcy itself.