ADL mechanism enhancements

Before

After

ADL Trigger Condition:

1. When the Applicable Insurance Fund has dropped by more than 30% from the peak within last 8 hours;

2. When the Applicable Insurance Fund has been fully depleted;

3. Applicable to Crypto Pre-Market Futures only: outstanding liquidation orders surpass a certain volume and time threshold (as determined by OKX) and the market cannot effectively absorb such orders.

ADL Trigger Condition:

1. When the present value of an Applicable Insurance Fund is lower than

a. the Average value of the Applicable Insurance Fund in the last 8 hours ("8 Hr Average") minus the greater of

i. 30% of the 8 Hr Average; or

ii. USD 50,000 (or equivalent)

(the result of (a) is the "Volatile Drop Threshold");

As an example of the Volatile Drop Threshold trigger, assume:

A. The present value of an Applicable Insurance Fund is USD 200,000;

B. The 8 Hr Average is USD 400,000;

C. 30% of the 8 Hr Average is USD 120,000 (since this is a number that is larger than USD 50,000, trigger 1(a)(i) above would be used, not trigger 1(a)(ii)).

Then, since USD 200,000 is less than the Volatile Drop Threshold of USD 280,000 (i.e. USD 400,000 - USD 120,000), ADL would be triggered.

2. When the Applicable Insurance Fund has been fully depleted;

3. Applicable to Crypto Pre-Market Futures only: outstanding liquidation orders surpass a certain volume and time threshold (as determined by OKX) and the market cannot effectively absorb such orders.

ADL Cessation Condition:

1. When the Applicable Insurance Fund has increased above 75% from the peak within last 8 hours;

2. The value of an Applicable Insurance Fund is at least USD 8,000 (or equivalent);

3. Applicable to Crypto Pre-Market Futures only: the volume of liquidation orders falls below a certain threshold, as determined by OKX.

ADL Cessation Condition:

1. The value of an Applicable Insurance Fund increases to an amount higher than the Volatile Drop Threshold plus a buffer of the greater of

a. 6% of the 8 Hr Average at the time that ADL was triggered; or

b. USD 10,000 (or equivalent);

As an example of the Volatile Drop Threshold cessation condition, assume:

A. The value of an Applicable Insurance Fund has risen to USD 320,000;

B. The Volatile Drop Threshold is USD 280,000;

C. The 8 Hr Average at the time that ADL was triggered was USD400,000;

D. 6% of the 8 Hr Average is USD 24,000 (since this is a figure that is greater than USD 10,000, cessation trigger 1(a), above, will be used, not 1(b)).

Then, since USD 320,000 is greater than USD 304,000 (i.e. USD280,000 USD 24,000), ADL would be stopped.

2. The value of an Applicable Insurance Fund is at least USD 8,000 (or equivalent);

3. Applicable to Crypto Pre-Market Futures only: the volume of liquidation orders falls below a certain threshold, as determined by OKX.