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Hyperliquid Leverage & Liquidation: The Margin Mechanics

Leverage and liquidation are the mechanics underneath every Hyperliquid position, and they're usually the part traders skim past on the way to the trade button. This page covers the arithmetic: how leverage sets your margin, where the maintenance threshold sits, and how to work out your own liquidation price. Understanding it before you open a position, not after, is arguably the single best risk-control step available to you — see our risk disclosure for the broader context on perp trading risk. How margin is pooled across positions and accounts is on the margin modes page; what happens step by step once a position is liquidatable is on the liquidations and ADL page. For the exchange overview, see our Hyperliquid review.

Mechanics re-verified against official Hyperliquid docs (margining, liquidations, margin tiers, contract specifications, portfolio margin and funding), 2026-10-08.

Margin modes, briefly

You pick a margin mode when you open a position. Cross margin is the default: all cross positions share one pool of collateral. That is capital-efficient, but a single position moving heavily against you draws down the collateral behind every other cross position. Isolated margin constrains a position's collateral to that asset; per the docs, liquidations there "do not affect other isolated positions or cross positions", and you can add or remove margin after opening.

Two variants depend on the market. "Some assets are strict isolated": they work like isolated margin except that margin cannot be removed (it comes out proportionally as you close). And builder-deployed (HIP-3) DEXs also support a "no cross" mode — isolated with margin removal, but no cross margin. Which positions share cross margin across those markets depends on your account's abstraction mode; the margin modes page covers that.

Leverage and initial margin

"Leverage can be set by a user to any integer between 1 and the max leverage", and the max depends on the asset — the liquidations docs put it at between 3x and 40x. Large positions can get less: on assets with margin tiers the cap steps down with size (BTC allows 40x up to $150M of notional and 20x above it, ETH 25x up to $100M and 15x above); the full tier table is on the margin modes page. The app shows each market's current cap.

Leverage determines the margin needed to open:

initial margin = position_size × mark_price / leverage

In other words, initial margin is the position's notional value times 1/leverage. At 1x it equals the full notional; as leverage rises, it shrinks proportionally. Note what the docs say happens next: "Leverage is only checked upon opening a position. Afterwards, the user is responsible for monitoring the leverage usage to avoid liquidation." You can also raise the leverage of an open position without closing it.

Maintenance margin

Maintenance margin — the threshold your account value must stay above — "is currently set to half of the initial margin at max leverage". On a 40x asset that is half of 2.5%, so 1.25% of notional; on a 3x asset it is 16.7%, the top of the docs' range. For assets with margin tiers, the rate is set per tier, so the part of a large position above a tier boundary carries the higher maintenance rate of that tier; the docs' formula is notional × maintenance_margin_rate − maintenance_deduction, with the deduction keeping the total continuous across tiers.

For a cross-margined position, liquidation triggers when account value, including unrealized PnL, falls below maintenance margin across all your cross positions. Because collateral is shared, an unrelated losing position can push the whole cross account toward this threshold even if the position you're watching hasn't moved. Isolated positions use the same logic, but "the only inputs to the computation are the isolated margin and the notional value of the isolated position." In both cases the price that counts is the mark price, which combines external exchange prices with Hyperliquid's own book and "may be significantly different from book price" during volatile moves or on highly leveraged positions.

Working out your liquidation price

The docs give the exact formula:

liq_price = price - side * margin_available / position_size / (1 - l * side)

l    = 1 / MAINTENANCE_LEVERAGE
side = 1 for long, -1 for short
margin_available (cross)    = account_value   - maintenance_margin_required
margin_available (isolated) = isolated_margin - maintenance_margin_required

Because maintenance margin is half the initial margin at max leverage, maintenance leverage is twice the max leverage: on a 40x asset it is 80, so l = 1/80 = 0.0125.

A worked example with illustrative numbers, ignoring fees and funding: a 1 BTC long opened at a mark price of $100,000, so $100,000 of notional, on BTC's 40x tier (maintenance 1.25%, or $1,250 here).

That last case is the one most new traders get wrong. Per the docs, "The actual liquidation price is independent on the leverage set for cross margin positions. A cross margin position at lower leverage simply uses more collateral." What moves a cross position's liquidation price is the size of the position against the account value behind it, not the number on the leverage control. For isolated positions it is different: the leverage you set decides how much margin is allocated, so it directly sets the liquidation price.

The liquidation price shown in the app is an estimate for the same reasons the formula has inputs that move. Once a position is open, the docs warn the displayed price "still may not be the actual liquidation price due to funding payments or changes in unrealized pnl in other positions (for cross margin positions)." For assets with margin tiers, the maintenance leverage in the formula is the one for the tier your position value falls into at the liquidation price.

What happens at liquidation

In short: the position is first sent to the order book as market orders — for positions larger than 100k USDC, 20% at a time — and anything left after the fill stays with you; "there is no clearance fee on liquidations". If account equity falls below two-thirds of maintenance margin without that succeeding, the liquidator vault (part of HLP) takes the position over, and "During backstop liquidation, the maintenance margin is not returned to the user." For a cross account that backstop takes every cross position and all cross margin. The docs' own advice for avoiding that loss is to "place stop loss orders or exit the positions before the mark price reaches the liquidation price." The full sequence, including auto-deleveraging, is on the liquidations and ADL page.

Portfolio-margin accounts work differently. The docs call portfolio margin "a generalization of cross margin": spot balances and cross perp positions are margined together, the account becomes liquidatable when its portfolio margin ratio exceeds 0.95, and there is no market liquidation phase — the backstop liquidator takes over directly. Eligibility and caps are on the margin modes page.

Withdrawal constraint

Hyperliquid also limits how much unrealized profit you can take out. Per the docs, unrealized PnL can be withdrawn from isolated positions or the cross account "only if the remaining margin is at least 10% of the total notional position value of all open positions", and it must also cover initial margin:

transfer_margin_required = max(initial_margin_required, 0.1 * total_position_value)

"Transferring" here means any action that removes margin other than trading: withdrawals, transfers to the spot wallet and isolated-margin transfers all count.

Funding

Funding is a second, slower pressure on margin. Hyperliquid pays it every hour, at one-eighth of the computed 8-hour rate, and it is added to or subtracted from your balance depending on which side you are on and the sign of the rate — see how it is calculated on the Hyperliquid fees page and our broader guide to funding rates. Because it changes margin available, a position already close to its liquidation price can be pushed the rest of the way by funding alone, without any further adverse price move.

None of this replaces checking Hyperliquid's own position tools before sizing a trade — it's the framework those tools are built on.

FAQ

What's the maximum leverage on Hyperliquid?

It depends on the asset: the docs put max leverage at between 3x and 40x, and on assets with margin tiers it falls for large positions (BTC: 40x up to $150M of notional, 20x above). Check the market's cap in the app before opening a position.

Does lowering my leverage move my liquidation price?

On an isolated position, yes: lower leverage allocates more margin, which moves the liquidation price further away. On a cross position, no: per the docs the liquidation price "is independent on the leverage set". What matters is the position's size against your account value, so to move it you add collateral or reduce the position.

Should I use cross or isolated margin for a first trade?

Isolated margin caps potential losses to the margin assigned to that one position, since it doesn't share collateral with the rest of the account. Cross margin is more capital-efficient but exposes your whole cross-margined balance to a single losing position. Which is appropriate depends on how much of your account you're willing to put behind one trade.

When exactly do I get liquidated?

For a cross position, when account value including unrealized PnL drops below the maintenance margin of your cross positions — half the initial margin at each asset's max leverage, or the tier rate for large positions — measured at the mark price. For an isolated position, the same comparison applies using only that position's margin and notional. The formula above turns that into a price.

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