⚠︎ Risk warning: leveraged derivatives on unregulated platforms — you can lose everything you deposit. Not investment advice.
Hyperliquid Liquidations: Partial, Backstop, ADL
Mechanics verified against Hyperliquid's official docs on 2026-09-15. The margin thresholds that start a liquidation are on the leverage and liquidation page; this page follows what happens after the threshold is crossed.
"A liquidation event occurs when a trader's positions move against them to the point where the account equity falls below the maintenance margin." Maintenance margin is half the initial margin at max leverage, so "between 1.25% (for 40x max leverage assets) and 16.7% (for 3x max leverage assets)". From there the docs describe three stages, each with rules that decide how much of your collateral you keep.
Stage 1: market liquidation into the book
"The positions are first attempted to be entirely closed by sending market orders to the book." If enough is closed to restore maintenance margin, "any remaining collateral remains with the trader". Two rules soften the blow. There is "no clearance fee on liquidations", unlike CEXs. And large positions are partially liquidated: "for liquidatable positions larger than 100k USDC ... only 20% of the position will be sent as a market liquidation order to the book", followed by "a cooldown period of 30 seconds" during which "all market liquidation orders for that user will be for the entire position". The docs frame the design as transparent — everyone can "compete for the liquidation flow" — and as retaining "as much capital as possible for the liquidated user".
Stage 2: backstop liquidation by the liquidator vault
"If the account equity drops below 2/3 of the maintenance margin without successful liquidation through the book, a backstop liquidation happens through the liquidator vault", which is "a component strategy of HLP". What you lose depends on margin mode: for a cross position, "the trader's cross positions and cross margin are all transferred to the liquidator" — "if the trader has no isolated positions, the trader ends up with zero account equity"; for an isolated position, only "that isolated position and isolated margin are transferred" and cross margin is untouched. "During backstop liquidation, the maintenance margin is not returned to the user", because the vault "requires a buffer to make sure backstop liquidations are profitable on average"; the docs' advice is to "place stop loss orders or exit the positions before the mark price reaches the liquidation price". Backstop profits "go entirely to the community through HLP" — the vaults page covers what depositing there means.
Stage 3: auto-deleveraging
"If a user's account value or isolated position value becomes negative, the users on the
opposite side of the position are ranked by unrealized pnl and leverage used." The ranking index
is (mark_price / entry_price) * (notional_position / account_value), and "those
traders' positions are closed at the previous mark price against the now underwater user".
Backstop-liquidated positions "have no special treatment in the ADL queue logic". The invariant
the docs commit to: "a user who has no open positions will not socialize any losses of the
platform". If you are profitable and highly levered on the winning side of a crowded market, you
are at the front of that queue.
The liquidation price
The estimate shown before entry "may be inaccurate ... due to changing liquidity on the book"; the price shown after entry still moves with funding and, for cross positions, with other positions' PnL. For cross margin, "the actual liquidation price is independent on the leverage set" — lower leverage "simply uses more collateral"; for isolated margin it does depend on leverage. The exact formula:
liq_price = price - side * margin_available / position_size / (1 - l * side)
l = 1 / MAINTENANCE_LEVERAGE side = 1 long, -1 short
margin_available (cross) = account_value - maintenance_margin_required
margin_available (isolated) = isolated_margin - maintenance_margin_required"For assets with margin tiers, maintenance leverage depends on the unique margin tier corresponding to the position value at the liquidation price" — see the margin tiers. Liquidations use the mark price, which "may be significantly different from book price" in volatile markets.
FAQ
Trade history says "Market Liquidation". What happened?
Stage 1: equity fell below maintenance margin and the position was sent to the book. Whatever collateral remained after the fill stayed with you.
Why is my account at zero after a backstop liquidation?
For a cross account, backstop liquidation transfers all cross positions and cross margin to the liquidator, and maintenance margin is not returned. Isolated positions elsewhere in the account are unaffected.
Can I be auto-deleveraged with no open position?
No: "a user who has no open positions will not socialize any losses of the platform".
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How the other covered venues liquidate and trigger stops is compared in liquidations and stop-losses compared.