# Market Types and ADL

Two types of markets are possible in Onlyperps.

### Fully Backed Markets

A fully backed market is one where the open interest is capped to be less than the total amount of tokens in the pool, ensuring that all profits can be fully supported. For example, in an SEI perpetual market backed by SEI-USDC, if the pool contains 2 million SEI and 1 million USDC, the maximum long open interest might be set at 1.8 million SEI, and the maximum short open interest at 900k USDC. This setup guarantees that profits are always fully backed, regardless of SEI's price fluctuations.

### Synthetic Markets

In contrast, a synthetic market might involve a scenario like a DOGE perpetual market backed by SEI-USDC. Here, the maximum long open interest could be a small fraction of the SEI tokens in the pool. However, if the price of DOGE were to surge significantly—say 20x—while SEI only doubles, the potential profits from long positions could surpass the total SEI available in the pool.

To prevent this imbalance, Auto-Deleveraging (ADL) may be triggered. When pending profits exceed a certain threshold configured for the market, profitable positions might be partially or fully closed. This mechanism helps maintain market solvency, ensuring that all profits can be paid out at the time of closing.


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