Ever wondered why your futures trading position suddenly gets liquidated during a flash crash?
KuCoin's Insurance Fund & ADL system is your last line of defense. Here's how it protects traders when things go wrong.
What Happens During Liquidation?
Normal Liquidation: Your margin can't cover losses → Position closed at market price
Problem: During extreme volatility, market prices gap past your liquidation price
Example: BTC crashes from $50K to $45K in seconds.
Your position is liquidated near $48K, but due to slippage, the execution happens below your bankruptcy price.
→ The shortfall is covered by the Insurance Fund.
Insurance Fund: The Platform Buffer
KuCoin Insurance Fund = Platform reserve that absorbs liquidation shortfalls
Live Check: KuCoin dashboard shows real-time Insurance Fund Balance per trading pair
ADL (Auto-Deleveraging): Last Resort
When Insurance Fund is insufficient to cover liquidation losses → Profitable opposite positions get closed
Example: Here is an image showing a live KuCoin futures position screen for DOGE-PERP/USDT (Long) during high-risk conditions:
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Red warning highlights the 4.18% risk ratio
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Position details panel showing profitability + leverage = top ADL target
How to calculate ADL Ranking Scores?
ADL Priority Formula:
Ranking = Leverage Used × Unrealized PnLExample:
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Your BTC Long: +15% PnL, 20x leverage → ADL Score = 300
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Competitor BTC Short: +10% PnL, 10x leverage → ADL Score = 100
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→ You get partially closed first
KuCoin ADL Mechanics
Trigger: Insurance Fund < threshold (varies by symbol)
Ranking: All profitable positions scored instantly
Execution: Top 20% of rankings partially closed
Repeat: Until fund balance recovers or market stabilizes
ADL Impact: You lose some profits but NEVER lose more than your margin
How to Avoid ADL Risk
✅ Monitor These Daily
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Insurance Fund Balance (KuCoin Futures → Info tab)
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Your ADL Ranking (Position details → Risk tab)
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Max PnL during volatility (avoid top ranks)
✅ Pro Trading Tips
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Use 1-5x leverage (safer ADL ranking)
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Take profits during trending markets
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Hedge positions across multiple symbols
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Enable "ADL Alerts" in KuCoin app
KuCoin's Advanced Protections
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Partial Liquidation: Only closes minimum size needed
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Gradual ADL: Never closes entire position at once
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Mark Price Liquidation: Prevents wick-hunting
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15-Minute Cooling: Pauses ADL during extreme volatility
Pro Move: Set limit orders to lock profits before ranking too high
Final Rule: Profits made = Profits taken
The moment you're top 10% profitable → Take 50% off table