Leverage and liquidation

Liquidation closes your position while its margin still covers the loss. With leverage, a loss past your margin would fall on someone else. Most liquidations go to the public order book, where anyone can compete for the flow.

Every test uses the mark price (a median of three inputs from external prices and Hyperliquid’s own book), not the last trade (oracles and mark prices).

One long, three thresholds

Say you go long 10 contracts at 1,000 with 10x, on an asset with 20x maximum leverage (l = 0.025), with 1,000 of isolated margin. Maintenance margin at entry is 250, leaving 750 available.

Threshold	Condition	Price
Liquidation	equity = maintenance margin	923.08
Backstop	equity = 2/3 of maintenance margin	915.25
Negative equity	equity = 0	900.00

• Mark at 923.08 → liquidation starts. The loss is 769.2, leaving 230.8, which is 2.5 per cent of the 9,230.8 notional.
• 923.08 to 915.25: the book has about 0.85 per cent of price to close you.
• Below 915.25: the backstop takes the position and the remaining margin.

The first row is the docs’ formula, 1,000 - 750 / 10 / 0.975:

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

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

Four steps as your equity falls

1. Trigger: equity below maintenance margin (margin), for a cross account as a whole or an isolated position alone.
2. Market liquidation: market orders go to the book, sliced above 100,000 USDC (table). Once maintenance margin is met again it stops, and the remaining collateral stays with you.
3. Backstop: below two thirds of maintenance, the liquidator vault (HLP) takes every cross position and all cross margin (a trader with no isolated positions ends at zero equity), or an isolated position and its margin only. Keeping the maintenance margin makes backstops profitable on average for HLP.
4. Auto-deleveraging: if an account’s or isolated position’s value goes negative, profitable opposing positions are closed against it (auto-deleveraging).

Each threshold hands the account on; only the first leaves the trader any margin.

What this means for you:

• Watch the mark. In volatile markets and at high leverage it can sit well away from the book.
• Your liquidation price moves with funding and, in cross, with every other cross position’s PnL.
• In cross, lowering leverage doesn’t help: add collateral or reduce size.
• Leave before the backstop, which takes the maintenance margin too: the docs advise a stop loss or exit first (TP/SL).
• Liquidated positions show as “Market Liquidation” in trade history.

Each HIP-3 dex has its own backstop

On a HIP-3 dex the backstop liquidator is a fully on-chain strategy at a per-dex address (table); the first HIP-3 dex’s ends ...0001. As an independent user it falls back to auto-deleveraging to keep the dex solvent. hip3LiquidatorTransfer moves funds in and out; only principal, not PnL, can be withdrawn.

Portfolio margin skips the book

A portfolio margin account is liquidatable when its portfolio margin ratio exceeds 0.95, and goes directly to the backstop liquidator at system address 0xbbb...b.

The numbers

Parameter	Value
Price used	mark price
Trigger	equity below maintenance margin
Maintenance margin rate	half the initial margin rate at maximum leverage; 1.25% (40x) to 16.7% (3x)
First step	market orders for the full position sent to the book
Partial liquidation	positions above 100,000 USDC (10,000 USDC on testnet): 20% per market liquidation order
Cooldown after a partial liquidation	30 s; market liquidation orders are for the entire position during it
Backstop threshold	equity below 2/3 of maintenance margin
Backstop, validator-operated perps	liquidator vault, a component strategy of HLP
Backstop, HIP-3	per-dex liquidator at 0x4000000000000000000000000000000000000000 + dex_index; cross-enabled assets only
Maintenance margin on backstop	not returned
Clearance fee	none
hip3LiquidatorTransfer amount	ntl in units of 1e-6 collateral token; a multiple of 1,000 tokens

Liquidations in the API

Source	Liquidation data
clearinghouseState	liquidationPx per position; the production integrations surveyed read it rather than compute it
Fill	liquidation: { liquidatedUser?, markPx, method }, method being "market" or "backstop"
userEvents WebSocket (channel "user")	can deliver liquidation: { lid, liquidator, liquidated_user, liquidated_ntl_pos, liquidated_account_value }
Non-funding ledger update	a liquidation entry: accountValue (the isolated account value, for isolated positions), leverageType ("Cross" or "Isolated"), liquidatedPositions (coin, szi)
Order status	liquidatedCanceled for orders a liquidation cancelled

One risk dashboard builds a liquidation ladder by bucketing tracked accounts’ liquidationPx by price.

Estimate, tier and HIP-3 caveats

• Pre-trade estimates can differ from the post-trade liquidation price as book liquidity changes; without enough margin, they assume a top-up to initial margin.
• Tiered assets: l comes from the tier matching position value at the liquidation price, not the current price.
• Isolated-only HIP-3 assets (noCross, strictIsolated) lack the per-dex backstop, which the docs say makes cross-enabled assets significantly less likely to see auto-deleveraging.
• Deployer-supplied mark prices: on a HIP-3 dex the deployer pushes mark inputs with setOracle, each push moving the mark at most 1 per cent (operating a perp dex).

Below zero equity, auto-deleveraging takes over. For liquidation distance as a pre-trade check, see the risk playbook.