# ADL

Astros employs an **Automatic Deleveraging (ADL)** system to manage scenarios where the **Insurance Fund** lacks sufficient assets to cover liquidation losses. In such cases, the ADL mechanism automatically reduces the positions of traders holding opposite market positions to restore balance and protect market stability.

## ADL Priority Ranking

The ADL system prioritizes trader positions for deleveraging based on two primary factors:

* **Profitability** of the position
* **Effective leverage** utilized

Positions with **higher profitability** and **greater leverage** are prioritized and thus more susceptible to automatic position reduction.

***

## Calculation of ADL Ranking

The ADL priority ranking is calculated using the following formulas and definitions:

#### **Effective Leverage**:

$$
\text{Effective Leverage} = \frac{\text{Mark Value}}{\text{Mark Value} - \text{Bankruptcy Value}}
$$

#### **Percentage Profit** (% Profit):

$$
\text{Profit} = \frac{\text{Mark Value} - \text{Average Opening Value}}{\text{Average Opening Value}} \times 100%
$$

Where:

* **Mark Value**: The current value of the position calculated at the **Mark Price**.
* **Bankruptcy Value**: The theoretical position value calculated at the **Bankruptcy Price**.
* **Average Opening Value**: The position's value calculated using the **Average Entry Price**.

***

### Importance of ADL

This structured ADL mechanism ensures:

* Fairness in liquidation scenarios by targeting positions with higher risk profiles first.
* Transparency through clear visual indicators and predictable calculations.
* Market stability by promptly addressing deficit situations.

Traders should regularly monitor their **ADL Ranking** indicator to proactively manage their positions and minimize risk exposure.\
Astros