LIQUIDATIONS AND PROTECTION ROUTINES
| Protection routine | Why it exists |
|---|---|
| Liquidation scans | Detect deteriorating margin before losses spread |
| Staged reduction | Shrink risk gradually before disorder becomes systemic |
| Insurance-aware handling | Absorb stress through the correct protocol-owned balance layer |
| ADL | Reduce winning positions only when normal liquidation is insufficient |
| Rebalance routines | Push an imbalanced market back toward a healthier posture |
#How stressed markets are handled
The runtime monitors accounts for margin deterioration and can move them into partial or staged liquidation flows before disorder becomes systemic.
The objective is to reduce risk in an ordered way rather than allow insolvency to spread across the book.
If ordinary liquidation is not sufficient, the engine can escalate into additional protection routines.
That includes bad-debt containment logic, rebalance paths, and ADL selection.
ADL is not a normal trading mode.
It is a controlled last resort used when the venue needs to shrink risk quickly and keep bad debt from growing through the rest of the system.
margin deteriorates
-> liquidation candidate scan
-> staged or partial reduction
-> insurance and bad-debt checks
-> rebalance or ADL if normal liquidation is insufficient
-> market posture may tighten further while recovery proceeds#Why protection lives inside the engine
Forced reduction cannot be bolted on after the fact.
It has to share the same state, priorities, and ordering guarantees as ordinary trade processing.
That is why liquidation, ADL, and rebalance logic live in the same engine domain as matching, funding, and market-state changes.
In a leveraged venue, the quality of the protection system depends on whether it sees the same state as the live execution system.
Dexter keeps those paths together so stress handling remains deterministic instead of improvised.