Hyperliquid Liquidation Triggers, Backstops, and Price Estimates
Summary
The document explains how Hyperliquid handles leveraged positions when account equity falls below maintenance margin. It first attempts to close positions with market orders on the book, allowing full or partial fills; any remaining collateral stays with the trader if margin requirements are restored. Large liquidations may be split into smaller orders, with a cooldown that changes later liquidation order sizes. If equity falls further and book liquidation does not succeed, a liquidator vault can take over cross positions and margin or an isolated position and its margin. The document says maintenance margin is retained during this backstop process.
It also describes how liquidation prices are estimated and calculated using available margin, position size, side, and maintenance leverage. Mark price combines external exchange prices with the platform’s book state, so it can diverge from the book price, particularly in volatile conditions or at high leverage. Estimates may also change with funding, unrealized profit and loss in other cross positions, liquidity, or margin tiers. The account is platform-specific, and the explanation does not provide empirical liquidation performance data.
Key ideas
- Liquidation begins when account equity falls below the maintenance margin requirement.
- Book orders are attempted first, and remaining collateral can stay with the trader if the required margin is restored.
- A liquidator vault can take over positions after deeper losses when book liquidation has not succeeded.
- The mark price used for liquidation can differ from the instantaneous order book price.
- Liquidation estimates can shift with funding, other cross positions, liquidity, and applicable margin tiers.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.