ADL

For Pro mode (orderbook perpetual contracts)

What is ADL?

Auto-Deleveraging (ADL) is a risk management mechanism that activates during extreme market conditions. It’s used only when other protective systems (like liquidation and insurance) cannot cover losses in time.

While Aster aims to minimize the chances of ADL occurring, understanding how it works can help traders prepare and manage their risk.

How does ADL work?

When a position is liquidated but the execution price is worse than the bankruptcy price (the price at which a trader’s losses equal their collateral, meaning their margin balance is zero), the system absorbs the remaining loss.

However, if the liquidation can’t be completed before the mark price hits the bankruptcy price, the system triggers ADL. This forcibly reduces the size of opposite-side positions held by other traders, starting with those who are most profitable and highly leveraged.

How ADL priority is determined

The system uses a ranking system based on a trader’s profit and leverage. This determines the order in which users are affected if ADL is triggered.

Here’s how the system calculates the ADL priority:

1. PnL percent

   max(0, Unrealized profit) ÷ max(1, Wallet balance)

2. Margin ratio

   If (Wallet balance + Unrealized profit) ≤ 0:

   → margin ratio = 0

   If (Wallet balance + Unrealized profit) > 0:

   → Margin ratio = Maintenance margin ÷ (Wallet balance + Unrealized profit)

3. Leverage PnL

   PnL percent × Margin ratio

4. Leverage PnL quantile

   User's leverage PnL rank ÷ Total number of users

The higher your leverage PnL quantile, the higher your ADL risk.

ADL risk indicator

In AsterEX Pro mode, the LeveragePnLQuantile bar shows your risk of being auto-deleveraged:

• 4 bars = high ADL risk

• Fewer bars = lower ADL risk

This position is showing 1 of 4 bars - there is a low ADL risk

How to reduce ADL risk

• Lower your leverage

• Close and reopen your position to reset your priority in the ADL queue

What happens if you’re ADL’d

• Your position is partially or fully reduced without warning

• You can re-enter the market at any time after

Additional notes

• The bankruptcy price might fall outside the current trading range, making it harder to fully close your position before losses exceed your margin

• ADL mostly affects traders with high leverage and large unrealized profits