Introduction to Risk Reserve Funds
Risk reserve funds serve as OKX's financial safeguard against liquidation slippage risks. These funds primarily consist of:
- Platform-provided reserves
- Residual amounts from liquidated orders
Key Features of Risk Reserve Funds
OKX maintains separate risk reserve pools across different product lines (leverage trading, futures, perpetual swaps, and options), with further segregation by:
- Contract type
- Underlying asset
- Settlement currency
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Product-Specific Reserve Rules
| Product Line | Reserve Structure | Example |
|---|---|---|
| Leverage Trading | Pooled by trading currency, with each currency having its own reserve | BTC/USDT and ETH/BTC liquidations contribute to both BTC and ETH pools |
| Futures | Segregated between coin-margined and USDT-margined contracts | BTCUSD futures use BTC reserves, while ETHUSDT futures use USDT |
| Perpetual Swaps | Independent pools for coin-margined/USDT-margined contracts | BTCUSD perpetuals maintain separate BTC reserves from LTCUSD pools |
| Options | Merged calculation for all contracts of the same underlying asset | All BTCUSD options share a single BTC reserve pool |
Daily Settlement Process
Every day at 16:00 HKT, the platform:
- Calculates net losses/gains from liquidations
- Adjusts risk reserve balances accordingly
- Records as either "liquidation injection" or "slippage loss"
Auto-Deleveraging (ADL) Explained
Trigger Conditions
ADL activates when:
- Risk reserves fall below minimum thresholds
- Reserve depletion exceeds 30% within 8 hours
- Market conditions necessitate emergency measures
How ADL Works
Instead of market-order liquidations, the system:
- Identifies counterparty positions based on risk metrics
- Executes forced closures at mark price
- Converts position equity to account balance
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Counterparty Selection Criteria
Position Ranking Factors:
- Leveraged returns (profit/loss ratio)
- Margin requirements
- Account risk level
| Position Type | Calculation Method | Ranking Priority |
|---|---|---|
| Isolated Margin | Profit: (ROI/Margin Ratio) Loss: (ROI*Margin Ratio) | High-to-low by leveraged return |
| Cross Margin | Adjusted by account margin ratio | Based on composite risk score |
Risk Indicator System
OKX provides real-time ADL risk assessment through a 5-level warning system:
- 🔴🔴🔴🔴🔴: High risk (top 20% of counterparty queue)
- 🟡🟡: Moderate risk
- 🟢: Low risk (bottom 20%)
Post-ADL Procedures
Users receive:
- SMS/email notifications
- Detailed position closure records
- Adjustment documents in order history
FAQ Section
Q: How often does ADL occur?
A: Extremely rare—only during unprecedented market volatility when standard liquidation processes become insufficient.
Q: Can I avoid being selected for ADL?
A: Yes, by maintaining:
- Lower leverage ratios
- Higher margin balances
- Diversified positions across products
Q: What happens to profits from ADL execution?
A: Closed position gains are immediately converted to available balance in your denomination currency.
Q: Does OKX still use socialized loss after ADL?
A: No. ADL eliminates the need for loss socialization across all users.
Q: How quickly are reserves replenished?
A: Through daily liquidation surpluses and platform injections, typically within 1-2 market cycles.
Q: Are there ADL protections for small accounts?
A: The ranking system inherently protects smaller/low-leverage positions by prioritizing high-risk accounts first.