Auto-deleveraging (ADL)
Auto-deleveraging (ADL) is the last-resort mechanism a crypto derivatives exchange uses when its insurance fund cannot absorb a bankrupt position: profitable positions on the opposite side are automatically closed, in whole or in part, at the bankruptcy price of the liquidated position, in an order ranked by profit and leverage.
Senzoukria · Glossary · Updated September 2026
At a glance
- Triggers when
- The insurance fund cannot take over a bankrupt position
- Binance ranking (PnL ≥ 0)
- PnL percentage × effective leverage
- Closing price
- Bankruptcy price of the liquidated position
- Fee (Binance)
- No trading fee on the ADL'd position
When it happens
Liquidation normally closes a losing position in the market before its collateral runs out. When that fails and the insurance fund cannot take over the resulting bankrupt position, someone still has to be on the other side of it. ADL assigns that role to traders who are profitable on the opposite side: their positions are closed against the bankrupt one. It is rare in normal conditions and concentrated in extreme moves on thin contracts.
How Binance ranks positions
Binance publishes its ranking. PnL percentage is unrealized profit divided by the absolute position notional; effective leverage is the absolute notional divided by the account balance plus unrealized profit. For positions with a PnL percentage of zero or more, the ranking is PnL percentage times effective leverage; for losing positions, PnL percentage divided by effective leverage. Positions that are more profitable and more highly leveraged are queued first. The affected positions are closed at the bankruptcy price of the liquidated order, the price at which its losses equal its collateral, and Binance charges no trading fee on them. The interface shows an indicator of each position's place in the ADL queue.
Why it matters to a profitable trader
- A winning, highly leveraged position can be closed without any order from its owner, precisely during a large move in its favor.
- The closing price is set by the bankrupt position, not by the current market.
- A hedge held on another venue or contract can be left unbalanced when one leg is deleveraged.
- Lower leverage on a profitable position lowers its place in the queue.
In Senzoukria
The desktop does not connect crypto accounts or hold crypto positions; its crypto charts read public trades and order books for analysis only. ADL events are not labeled in public trade feeds, so a chart cannot identify them; what can be seen is the extreme aggression and the thinning of the book in which they occur.
Related
In the same section
- Autocorrelation
- Auction market theory
- Automated trading
- At the money
- Autopilot
- Arming
- Average fill price
- Anchored VWAP
Sources
This page in other languages
Frequently asked questions
- Can auto-deleveraging close a profitable position?
- Yes. That is exactly what it does: it closes profitable positions on the opposite side of a bankrupt one when the insurance fund cannot absorb it. The most profitable and most leveraged positions are first in the queue.
- How can I reduce my exposure to ADL?
- Using lower effective leverage on profitable positions and taking profit during extreme moves lower the position's rank in the queue. The exchange's ADL indicator shows the current rank.