Hyperliquid activates the cross-Margin ADL mechanism, forcing position reduction without a counterparty.

Hyperliquid announced the launch of a cross-margin ADL mechanism, which will forcefully reduce high-leverage positions when the insurance fund tightens, avoiding manipulation of a single market. (Background: Hyperliquid suffered a 'suicidal attack', resulting in a $5 million loss. Is a bigger disaster quietly approaching?) (Supplementary background: In November, Majid brother was liquidated 71 times by Hyperliquid, earning the title of 'Liquidation King'! Aster is stealing customers: Majid mode will start next week.) The encryption derivation platform Hyperliquid officially activated the cross-margin automatic deleveraging ADL (Auto-Deleveraging) mechanism this week. This design aims to mitigate the spread of bad debts by forcefully reducing high-leverage and high-profit positions when the insurance fund HLP (Hyperliquid Liquidity Provider Vault) is depleted, ensuring the normal operation of other markets on the exchange. Concerns about high-leverage market manipulation on Hyperliquid Previously, Hyperliquid had lacked an automatic reduction mechanism, resulting in several instances of deliberate manipulation. At the end of March 2025, a Whale large investor initially sold a large amount of JELLY tokens in the spot market, causing a price crash. While the price was falling, the attacker opened numerous short orders on Hyperliquid. Due to severe price fluctuations and liquidity mechanisms, the HLP Vault (as the counterparty) was forced to take on a large number of positions (reportedly, HLP was forced to hold passive short positions). Subsequently, the Whale bought back JELLY in the spot market, violently pumping the price. The sharp price increase caused significant losses to the positions held by HLP (forced to close positions at high prices), while the attacker profited from it. This attack resulted in approximately $12 million in losses for the HLP Vault (there are also claims that its position risk once threatened the solvency of the entire vault). Further reading: Hyperliquid's 'manipulated price' actively liquidated JELLY short positions faced backlash. How ADL initiates rescue Hyperliquid describes ADL as a 'flood diversion area' in times of crisis. When the insurance fund cannot bear the losses, the system will lock high-leverage and high-realized profit long and short positions, and forcefully reduce or close positions at bankruptcy prices. Affected traders mostly still retain some unrealized profits but lose the chance to continue magnifying returns. Official explanation: ADL aims to maintain market integrity and prevent a chain default that could disrupt the entire ecosystem. From the perspective of information transparency, the platform interface adds an ADL sorting indicator, allowing users to assess their own risk of being deleveraged in real-time. The system needs to calculate the overall net risk of the account, rather than just observing a single position. Compared to the position-by-position model, this requires more complex risk parameter adjustments and real-time capital allocation. Cross-margin can reduce the concentration of bad debts in extreme market conditions, decreasing reliance on a single user or insurance fund. Hyperliquid is attempting to institutionalize mechanisms to avoid a recurrence. Related reports: A Whale that once had unrealized gains nearing $100 million self-explodes: Why I no longer trade on HyperLiquid? Nvidia's earnings report is coming tonight! The probability of exceeding expectations on Polymarket is 90%, Hyperliquid Whale is going long on NVDA with 10x leverage. <Hyperliquid activates cross-margin ADL mechanism, forcing reduction without counterparties> This article was first published on BlockTempo, the most influential blockchain news media.