Skip to main content
Auto-deleveraging (ADL) is the last safeguard in the liquidation waterfall, inherited from HyperCore. It activates only when market liquidations fail to close an under-collateralized position.

​
How ADL Ranks Positions

A composite index decides which profitable traders are deleveraged first: sorting index=mark priceentry price×notional positionaccount value\text{sorting index} = \frac{\text{mark price}}{\text{entry price}} \times \frac{\text{notional position}}{\text{account value}} Accounts with the highest index — the most profitable and most leveraged on the opposing side — are deleveraged first.

​
Unwinding

Selected positions are closed at the prevailing mark price against the insolvent side. This keeps aggregate system equity constant and prevents bad debt from accumulating.

​
Key Characteristics

  • Last resort. Conservative isolated-margin settings and order-book liquidations minimize ADL frequency.
  • Mechanical and non-discretionary. ADL is a transparent rebalancing event when liquidity is exhausted.
  • Verifiable. Every event is independently checkable on-chain via HyperCore settlement records.
  • Why it exists. Every long matches a short. ADL preserves that zero-sum constraint when normal liquidation fails.