Hyperliquid Liquidations Explained

Hyperliquid is a fully on-chain perpetuals exchange. That makes its liquidations different in one important way from a centralized exchange: they are visible to everyone, in real time, down to the wallet. Here is how the mechanism works and what it means for traders.

When a position gets liquidated

Each market on Hyperliquid has a maximum leverage, from 3x to 40x depending on the asset. The maintenance margin is half of the initial margin at max leverage, so it ranges from 1.25% on 40x assets to about 16.7% on 3x assets.

A position is liquidated when account equity falls below maintenance margin. Liquidations are measured against the mark price, which combines external exchange prices with the state of Hyperliquid's own order book. That protects traders from being liquidated by a single wick on one venue.

How the liquidation is executed

1. Market orders to the book. The engine first sends market orders to the order book to close the position. If the account gets back above maintenance, the trader keeps the remaining collateral.
2. Partial liquidation for large positions. Positions above 100,000 USDC are liquidated in parts: 20% goes to the book first. After a partial liquidation there is a 30-second cooldown, during which further liquidation orders can cover the whole position.
3. Backstop by the liquidator vault. If equity drops below two-thirds of maintenance margin and the book could not absorb the position, the liquidator vault, a strategy inside HLP, takes it over. In a backstop liquidation the trader does not get the maintenance margin back, and the PnL from liquidations flows to HLP depositors.

Cross and isolated margin behave differently in a backstop: for cross margin, all cross positions and cross collateral move to the liquidator; for an isolated position only that position and its margin are affected.

Why Hyperliquid liquidations are public

Every position, its size, entry and liquidation price live on Hyperliquid's L1. Anyone can read them. That is why you see posts about specific whales sitting a few percent from liquidation, and why some traders watch those levels as closely as support and resistance.

Liquidation cascades on Hyperliquid

When several large positions share a liquidation zone, the forced orders from the first can push price into the next. The partial-liquidation rule slows this down for very large positions, but it does not stop a cascade when many accounts are leveraged into the same level.

This is the practical reason to track liquidation clusters rather than single liquidations: the cluster tells you how much forced flow can follow.

How to track Hyperliquid liquidations

• Large liquidations as they happen, with side, size and price.
• Near-liquidation positions: whales whose positions are drifting toward their liquidation price.
• Clusters: several tracked positions at risk around the same level.

Doing this by hand means polling the API and computing distances constantly. That is exactly what the liquidation radar does for you, in Telegram.