# Automatic Deleveraging / Counterparty Liquidation {% hint style="info" %} Recall the following from the [Liquidation](/omni/trading/liquidation.md) page: > Due to the nature of bilateral trading, a position being closed means it will be closed for both parties. The party whose balance has fallen below the maintenance margin requirement (and thus caused the liquidation) will be tagged as the taker, and the other party the maker. > {% endhint %} {% hint style="info" %} From the [The Omni Liquidity Provider (OLP)](/omni/the-omni-liquidity-provider-olp.md) page: > For every trade on Omni, both OLP and the user are subject to margin requirements. This means both parties are required to maintain margin in a [settlement pool](/variational-protocol/key-concepts/settlement-pools.md), and may be subject to liquidation if their margin levels fall below requirements. > {% endhint %} OLP being liquidated is the functional equivalent of what is known as Automatic Deleveraging (ADL) on other exchanges. Automatic Deleveraging (ADL) is a last-resort mechanism that the [Omni Liquidity Provider (OLP)](/omni/the-omni-liquidity-provider-olp.md) can use to protect itself in the case of imminent bad debt or liquidity constraints. Similar to other trading platforms, ADL only occurs in periods of extreme market volatility with significant liquidations. When positions are auto deleveraged, the user's position is closed at the settlement price plus a liquidation reward. The user gains the [*liquidation penalty*](/omni/trading/liquidation.md), as OLP is liquidated and therefore penalized. Auto deleveraging can occur when: * A market is undergoing extreme volatility, and OLP is unable to safely maintain margin for an open position. * OLP is facing severe liquidity constraints and needs to immediately free up margin. Traders whose positions are affected by ADL are notified in-app via a banner popup. ADL events are categorized as "counterparty liquidation" in the portfolio page's trades and transfers tables. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.variational.io/omni/trading/automatic-deleveraging-counterparty-liquidation.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.