Automatic Deleveraging Mechanism(ADL)

Vanilla Finance, as a leading financial trading platform, is committed to creating a safe and efficient trading environment for its users. The liquidity of Vanilla products is supported by experienced market makers, with their extensive expertise in derivatives trading, ensuring that users enjoy a stable and fair liquidity experience.

In addition, Vanilla Finance has introduced an Automatic Deleveraging (ADL) mechanism to respond to extreme market fluctuations, further protecting users' trading interests. This not only reduces the risk of liquidity shortages preventing profitable settlements but also safeguards users' rights through specific execution and settlement rules, while maintaining the platform's stability and security.

Introduction to the ADL Mechanism

Auto-Deleveraging (ADL) is a risk control measure to address sharp market fluctuations or unforeseen events. When a risk event occurs and the settlement margin is insufficient to cover all profits, the ADL will be triggered. This mechanism will automatically reduce the positions of the top-ranked profitable orders to balance market risks and protect the interests of all users with open positions. For each product purchased by users, the platform will collect the corresponding settlement margin from the market makers to cope with user settlements.

Trading Recommendations

To reduce the risk of triggering the ADL, we advise users to diversify their investments: Do not invest all funds in a single cryptocurrency or market to disperse risks.

ADL Execution Process

Once the ADL is triggered, the platform will:

1. Reduce positions of the currently top-ranked profitable orders without charging any fees.

2. The relevant orders will be deducted, and the profits after position reduction will be transferred into the account balance.