TechFlow news, November 28 — According to Financefeeds, decentralized derivatives exchange Hyperliquid has activated its auto-deleveraging (ADL) liquidation system across all major perpetual contract markets, aiming to strengthen risk management as open interest grows and funding rates fluctuate.
The ADL system serves as a backup liquidation mechanism, triggered when the insurance fund cannot fully absorb losses from insolvent positions. In such cases, profitable traders with high leverage and substantial unrealized gains may have part or all of their positions reduced to offset losses. Hyperliquid emphasizes that ADL is only triggered under extreme conditions, designed to prevent cascading effects that could destabilize the entire ecosystem.
The system calculates traders' deleveraging priority based on leverage level, position profitability, and overall system risk exposure. The platform states that ADL activation does not affect the majority of traders under normal conditions, primarily impacting those using high leverage or holding positions in less liquid markets.
