> ## Documentation Index
> Fetch the complete documentation index at: https://docs.scape.exchange/llms.txt
> Use this file to discover all available pages before exploring further.

# Auto-Deleveraging

> How auto-deleveraging (ADL) works on Scape.

Auto-deleveraging (ADL) is the last safeguard in the liquidation waterfall, inherited from
HyperCore. It activates only when market [liquidations](/risk-and-margining/liquidation-mechanics)
fail to close an under-collateralized position.

## How ADL Ranks Positions

A composite index decides which profitable traders are deleveraged first:

$$
\text{sorting index} = \frac{\text{mark price}}{\text{entry price}} \times \frac{\text{notional position}}{\text{account value}}
$$

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.