Auto Deleveraging

Auto-Deleveraging (ADL)

Auto-Deleveraging (ADL) is a critical risk management mechanism on Drake that maintains trader net exposure within controllable thresholds. ADL automatically reduces positions when risk levels become too high due to market volatility or insufficient margin, protecting both the platform's stability and the dVault insurance fund.

How ADL Works on Drake

Trigger Condition

ADL activates under specific circumstances to protect platform stability:

Prolonged Imbalance — When there is a sustained imbalance caused by large liquidations or potential malicious manipulation, Drake initiates the ADL process. This action frees up open position capacity and safeguards the dVault insurance fund from excessive exposure.

ADL Process

When ADL is triggered, Drake follows a systematic approach to reduce positions:

1. Position Ranking by Size Positions are ranked with larger positions prioritized for closure first. This targets the positions that contribute most to the imbalance.

2. Profit Prioritization Within the same position side (long or short), positions with higher unrealized profits are prioritized for closure. This ensures that profitable traders are affected before those at breakeven or loss.

3. Order History Recording Any position reduced through ADL is recorded in your order history with a clear "ADL" label. This provides full transparency and allows you to easily track any adjustments made to your positions.

Key Benefits

Risk Reduction ADL protects the platform and all traders from extreme market conditions by preventing excessive one-sided exposure that could threaten the insurance fund.

Transparency All ADL actions are clearly documented in your order history, ensuring full accountability and allowing you to understand exactly when and why your positions were adjusted.