Auto-Deleveraging (ADL)

When users are forcibly liquidated, their liquidated positions are taken over by MUFEX's liquidation engine. If the insurance fund is insufficient to compensate for the losses caused by the liquidated positions, the automatic deleveraging system will automatically deleverage investors who hold positions in the opposite direction to the liquidated positions. The order of deleveraging is determined based on the profit percentage and effective leverage, and the deleveraging price is the bankruptcy price of the liquidated positions.

Automatic deleveraging ranking system:

As long as you hold a position, you enter the ranking system. The larger your position, the higher your leverage, and the higher your profit percentage, the higher your ranking in the system. In situations where the market cannot be fully liquidated, you may be prioritized for deleveraging.

Ranking formula:

The priority order of deleveraging is calculated based on profits and leverage, giving priority to traders with higher profits and higher leverage.

ADL Score (Profit List) = Profit Percentage * Effective Leverage (based on position profits)

ADL Score (Loss List) = Profit Percentage / Effective Leverage (based on position losses)

Effective Leverage = Mark Price / (Mark Price - Bankruptcy Price)

Profit Percentage = (Mark Price - Average Opening Price) / Average Opening Price

Note: As the leverage used increases, the bankruptcy price approaches the mark price, resulting in a higher effective leverage calculation. The system ranks long and short positions separately from highest to lowest.