Hyperliquid launches cross-margin automatic deleveraging (ADL) liquidation system
ChainCatcher News, Hyperliquid has enabled the cross-margin Auto-Deleveraging (ADL) liquidation system across all its major perpetual contract markets, introducing deeper risk management in the context of rising open interest and fluctuating funding rates. After a series of internal stress tests and simulations conducted over the past month, ADL is now officially live to ensure orderly market operations during periods of extreme volatility, especially when liquidity tightens or large positions approach liquidation.
When the insurance fund cannot fully absorb the losses from liquidated positions, ADL (Auto-Deleveraging mechanism) acts as a backup liquidation method. In such cases, positions of profitable traders with high leverage and high unrealized gains may be partially or fully reduced to cover the funding shortfall. Hyperliquid emphasizes that ADL will only be triggered in exceptional circumstances, and it is designed to maintain market integrity by preventing a chain of defaults that could potentially disrupt the entire ecosystem.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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