KuCoin Insurance Fund & ADL: Your Last Line of Defense in Futures Trading
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
Disclaimer: The information on this page may come from third parties and does not necessarily reflect KuCoin’s views. It is provided for general reference only and should not be interpreted as financial or investment advice.
Virtual asset investments may involve risk. Please carefully assess the product risks and your own risk tolerance. For more information, please refer to our Terms of Use and Risk Disclosure.