ADL is a last-resort process used by exchanges that forcibly closes profitable traders' positions to cover the losses of bankrupt accounts, which can disrupt the market and penalize non-liquidated users. Maintains Market Stability: It acts as a layer of protection against major market volatility, hedging against liquidity risks and reducing the potential for a cascading chain of liquidations.3. What Contributes to the Security Fund?

The updated methodology introduces a staged approach to liquidation that prioritises reducing your risk exposure before resorting to a forced liquidation of your collateral, giving the process more time to work in an orderly manner, preserving more of your portfolio value where possible, and reducing the risk of unnecessary or disruptive liquidation.