Auto deleveraging

Auto-deleveraging is a type of last-resort liquidation in which a bankrupt trader's positions are closed directly against opposing traders' positions instead of the vAMM. Auto-deleveraging matches a bankrupt account's position against the opposing traders' position at the current mark price.

The liquidation engine maintains an ordered list of accounts that are candidates for deleveraging. The list is ordered by each trader's profitability and leverage; highly profitable and highly leveraged traders are deleveraged first.


profitability=unrealized PnLcollateral, margin ratio=maintenance marginaccount value\text{profitability} = \frac{\text{unrealized PnL}}{\text{collateral}},\ \text{margin ratio} = \frac{\text{maintenance margin}}{\text{account value}}.

Accounts are ordered by profitabilitymargin ratio\text{profitability} * \text{margin ratio} in descending order.

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