Auto-Deleveraging (ADL) Rules – HashKey Global

Auto-Deleveraging (ADL) is a mechanism used to mitigate the risk of market liquidation. When forced liquidation occurs in the market, if the risk protection fund cannot cover the liquidation losses, the ADL mechanism is triggered. HashKey strives to avoid such situations, but due to high market volatility and high leverage in the future market, such situations can still surface.

When ADL is triggered, the platform will no longer place orders in the market. Instead, it will directly match the order with the top-ranked counterparty account at the current mark price. Currently, the ADL mechanism implemented by HashKey is only applicable to USDT settlement perpetual futures.

The ranking of counterparties for ADL is based on position returns. Users can see the related indicator lights on the positions page. The relevant formulas are as follows:

Profit Position: Return rate * Leverage multiple
Loss Position: Return rate / Leverage multiple

Return Rate = (Position Profit / Position Margin) * 100%

Long Position Profit: (Closing Average Price - Opening Average Price) * Closing Quantity
Short Position Profit: (Opening Average Price - Closing Average Price) * Closing Quantity
Opening Margin: (Opening Quantity * Opening Average Price) / Leverage Multiple

According to the above rules, accounts with higher return rates and lower position margin rates are more likely to be selected as ADL counterparties, facing the risk of auto-deleveraging. Users can see their ADL risk in real-time through the signal lights on the page.

There are 5 levels of signal lights. When all 5 lights are on, it means the position ranks high as a counterparty and has a high risk of auto-deleveraging. When only 1 light is on, it means the position ranks low as a counterparty and has a low risk of auto-deleveraging. When users are auto-deleveraged, they will receive SMS and email notifications informing them of the positions reduced and the reduction prices. They can also check the reduced positions in the order center, where the bill type will be listed as auto-deleveraging.

Related articles