Hyperliquid has introduced its cross-margin auto-deleveraging (ADL) mechanism, designed as a safeguard for the trading system. ADL acts as a last-resort measure to stabilize the market rather than penalize successful traders. When a trader's position incurs significant losses and is liquidated, the system attempts to sell or buy the position on the market. However, during extreme market conditions, there may not be enough counterparties available. In such cases, Hyperliquid's HLP steps in to assume the remaining collateral of the losing position, holding it until market conditions improve. This mechanism prioritizes high-resource users, akin to "bumping first-class passengers," due to their larger resource consumption and associated risks.
Hyperliquid Launches Cross-Margin Auto-Deleveraging Mechanism
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