Important Changes: Auto-Deleveraging

Effective Monday 3rd October 12:00 UTC, a significant change was made to all BitMEX products: we have shifted from the Dynamic Profit Equalisation (DPE) system to the Auto-Deleveraging (ADL) system.

Removal of DPE – Introducing Auto-Deleveraging

On all BitMEX products, we moved from DPE (Dynamic Profit Equalisation) to a new ADL (Auto-DeLeveraging) system.

Why the change? There are several important reasons:

  1. Simpler Trading: Profit is now usable immediately! Withheld profit and rebalances will be removed. Average entry price, unrealised PNL, and realised PNL will now behave as expected.
  2. Reduction of Moral Hazard: Under a socialised loss system, a single risky trader can create a large loss for all traders, including low-risk traders. Under the ADL system, traders with the highest leverage will be deleveraged first, incentivising lower leverage traders to trade without penalty.
  3. Faster Markets: With ADL, there is no risk of losses on highly-leveraged or illiquid markets. This will allow BitMEX to introduce new products more quickly.

Under the ADL system, deleverage occurs if the liquidation is not filled by the time the mark price reaches the bankruptcy price. Deleveraging is when a long or short position is liquidated, and then a trader with an opposing position is closed out in profit.

As opposed to other deleveraging systems, ADL deleverages the highest-leveraged traders who thus pose the biggest risk for other traders. Your place in the queue is viewable in real-time so you can adjust your position size & leverage to avoid deleveraging.

For users who like to hold low-leveraged positions for extended periods of time, this means that loss risk has been significantly reduced.

For further information about the ranking formula, please see the Ranking section in the Auto-Deleveraging document.