How liquidation works on Hyperliquid

When liquidation happens

Every position needs a minimum amount of collateral, the maintenance margin. On Hyperliquid it is half the initial margin at the asset's maximum leverage, which works out at between 1.25% of position value (assets with 40x max leverage) and 16.7% (assets with 3x max leverage). When your equity (collateral plus unrealised PnL) falls below that, you can be liquidated.

Liquidations use the mark price, which combines external exchange prices with Hyperliquid's own order book. In fast markets the mark price can differ noticeably from the last traded price, so you can be liquidated even if the price on the book never quite reached your level.

The liquidation process step by step

1. Order book liquidation. Hyperliquid sends market orders to the book to close your position. If enough is closed that the rest meets maintenance margin again, you keep the leftover collateral.
2. Partial liquidation for large positions. For liquidatable positions above 100,000 USDC, only 20% of the position is sent to the book at first. After a block with a partial liquidation, a 30-second cooldown applies, during which liquidation orders can cover the whole position.
3. Backstop liquidation. If equity falls below two-thirds of maintenance margin and the book cannot absorb the position, the liquidator vault, a component of HLP, takes it over. In a backstop liquidation your remaining maintenance margin is not returned to you.
4. Auto-deleveraging (ADL). If an account or isolated position ends up with negative equity, Hyperliquid closes opposing positions held by profitable traders at the previous mark price to cover the shortfall.

Unlike many centralised exchanges, Hyperliquid charges no separate "clearance fee" on liquidations. You still lose your margin.

Cross vs isolated

• Cross margin: if you are backstop-liquidated, all your cross positions and cross collateral go to the liquidator. With no isolated positions, your account equity ends at zero.
• Isolated margin: only that position and its margin are affected; the rest of your account is untouched.

See margin and leverage for how to choose.

Worked example

You open a 1 BTC long at $100,000 with 10x isolated leverage, so you post $10,000 of margin. BTC's max leverage is 40x, so maintenance margin is 1.25% of position value.

Your equity is $10,000 + (P − 100,000), where P is the BTC mark price. Liquidation starts when that equals 1.25% of P: P − 90,000 = 0.0125 × P, so P ≈ $91,140. A drop of under 9% wipes out the position, and fees and funding paid along the way move the level slightly closer. Check your own positions with the liquidation calculator.

More on ADL

ADL is the last line of defence. Profitable traders on the other side are ranked by a mix of unrealised profit and leverage, using the index (mark price ÷ entry price) × (position notional ÷ account value), and the highest-ranked are closed first. The docs state that users with no open positions never absorb platform losses.

ADL is rare but not theoretical. During the market crash of 10 October 2025, Hyperliquid's open interest fell about 60% and ADL forcibly closed profitable short positions to offset bankrupt longs (The Defiant). ADL was also triggered during the suspected FARTCOIN manipulation in April 2026. If you are heavily in profit on a crowded trade, ADL can close you out at a price you did not choose.

How to avoid liquidation

• Use lower leverage than the maximum. The difference between 5x and 20x is the difference between surviving a normal swing and not.
• Use isolated margin for speculative trades so one bad bet cannot drain your account.
• Set a stop-loss well above your liquidation price (see TP/SL orders).
• Watch funding on positions held for days.

More in how to avoid liquidation.

Frequently asked questions