BIT Crypto Exchange Launches ADL to Enhance Risk Control Management
BIT crypto exchange has recently launched its own Auto-Deleveraging (ADL) mechanism to improve its account risk control management system. While some traders are concerned about the forced liquidation that may result from this new feature, BIT claims that it is necessary for better risk management and to ensure trading fairness.
ADL, or Automatic Deleveraging, is a mechanism used by some cryptocurrency exchanges to manage their risk exposure and maintain the stability of their trading platform. On BIT crypto exchange, if the market moves against a leveraged position and the user account’s maintenance margin rate exceeds 100%, the forced liquidation mechanism will be triggered.
The system will first attempt to liquidate the account by matching orders in the order book market. If the pending order can find a match in the order book market and is fully executed, then the account will be liquidated at the market price. However, if there are no matching orders in the order book market, the ADL mechanism will be activated.
The ADL mechanism will automatically deleverage the user’s position by closing out the largest position first until the maintenance margin rate is below 100%. This ensures that the user’s account is not completely liquidated, but only the necessary amount is deleveraged to maintain the stability of the platform.
BIT crypto exchange claims that the ADL mechanism is necessary for better risk management and to ensure trading fairness. By using this mechanism, the exchange can prevent large losses and maintain the stability of the platform, which benefits all traders.
However, some traders are concerned about the forced liquidation that may result from the ADL mechanism. They argue that it may lead to unfair losses and discourage traders from using leverage. BIT crypto exchange has responded by stating that the ADL mechanism is necessary for the long-term stability of the platform and that it will continue to monitor and improve the system to ensure fairness for all traders.
Overall, the launch of the ADL mechanism by BIT crypto exchange is a significant step towards improving its risk control management system. While some traders may be concerned about the forced liquidation that may result from this new feature, BIT claims that it is necessary for better risk management and to ensure trading fairness.
