# How does liquidation work on Hyperliquid?

Stage 3 · Pour the foundation (how much you can lose, how big to go) · Updated 2026-10-17

Hyperliquid liquidates a position when the equity backing it falls below its maintenance margin, judged on the mark price, not the last trade. On a fresh isolated position that point sits a little closer than one over your leverage: about 17.9% away at 5× on a 20× market. Leverage changes where liquidation sits, never what your stop loses.

## In short

- Liquidation is judged on the **mark price**, a median that blends other large exchanges with Hyperliquid’s own book. Take-profit and stop-loss triggers watch the same price.
- Every market has a maintenance rate of half its initial margin at maximum leverage: 2.5% on a 20× market, and between 1.25% and 16.7% across the venue.
- A fresh isolated long liquidates (1 ÷ leverage − m) ÷ (1 − m) below entry, where *m* is that rate. Always a little closer than one over leverage.
- Isolated puts one position’s margin on the line. Cross puts the whole cross balance behind every cross position.
- Choose the stop first, size from the stop, then pick the leverage. Leverage moves the liquidation price; it never changes what the stop loses.

## What triggers a liquidation

Every open position needs a minimum amount of equity behind it, called the **maintenance margin**. When the equity backing a position falls below that line, Hyperliquid starts to close it. For an isolated position, that equity is the margin you gave it plus its unrealised profit or loss. For cross positions, it is the account’s whole cross balance.

The line is judged on the **mark price**, not on the last trade. Hyperliquid takes the median of three prices: its oracle price corrected by a 150-second average of the gap to its own book; the middle of its own best bid, best ask and last trade; and a weighted median of the same perpetual on several large exchanges. One wild print on one venue cannot move it alone. It updates about every three seconds, and it is also the price that fires take-profit and stop-loss orders, so your stop and your liquidation watch the same number.

The maintenance rate belongs to the market. It is half the initial margin at the market’s maximum leverage, so a market that allows 20× needs 2.5% of the position’s value to stay open, and a market capped at 3× needs about 16.7%. Very large positions move into margin tiers with a lower maximum leverage, which raises the rate for them.

## Where your liquidation price sits

Hyperliquid publishes the formula. For a fresh isolated long with no margin added later, it comes down to a distance below entry of (1 ÷ leverage − m) ÷ (1 − m), where *m* is the maintenance rate. A short divides by 1 + m instead, which puts its liquidation very slightly closer.

Two things follow. The distance is always shorter than the one-over-leverage guess, because the maintenance margin comes off the top before anything else. And the gap widens as leverage rises: at 20× on a 20× market the guess says 5%, the formula says about 2.6%. Half the room the guess promised is already spoken for.

## Isolated or cross: what is on the line

**Isolated** gives one position its own margin. Only that margin can be lost on it, and while it is open you can add margin, or take spare margin out within a limit. Adding margin moves the liquidation price away from entry; taking it out pulls it closer.

**Cross** is the default. Every cross position shares the account’s cross balance, so a profit on one helps hold up the others and a loss on one eats into the room of all of them. On cross, the leverage you pick sets how much margin the order needs when it opens. Where liquidation sits depends on the whole balance and on everything else open against it.

Neither mode is safer on its own. Cross with a large balance behind one small position leaves liquidation far away, but the whole balance is what is backing the trade. Isolated keeps the damage to one position’s margin, at the price of a liquidation level that is closer and fixed by what you put in.

## What happens when it triggers

Hyperliquid first tries to close the position the ordinary way, with market orders sent to the order book. If that works, whatever collateral is left over stays in your account, and no separate liquidation fee is charged on top.

Large positions are closed in steps. Above 100,000 USDC of value, the first order covers a fifth of the position and starts a 30-second cooldown. If the position is still below its maintenance margin during that cooldown, the next order can cover all of it.

If equity keeps falling and drops below two thirds of the maintenance margin before the book has absorbed the position, the **backstop** takes over: the position passes to a liquidator vault inside HLP, the community vault, and its profit or loss is shared by HLP’s depositors. In a backstop the maintenance margin is not returned. On cross, every cross position and the cross margin go together; on isolated, only that position and its margin.

## Stop first, then size, then leverage

Your stop decides what a wrong idea costs. Your liquidation price decides when the venue takes the decision away from you. When the two sit close together, one fast move through the stop can reach both before the stop’s order is filled, and a backstop keeps the maintenance margin as well.

A useful check is how many stop distances away liquidation sits. In the example below, at 5× it is about 7 stops away. At 20× it is barely one: liquidation at 97.44 is 6 cents beyond a 97.50 stop. How much room you want is your call. What matters is that you know the number before the order goes in.

Hyperliquid checks leverage when a position opens and lets you raise it later without closing. Anything that takes margin out of an isolated position pulls its liquidation towards your stop, so look at the liquidation line again after every change.

## One trade, five leverages

_Example numbers._

An isolated long on a market whose maximum leverage is 20×, so the maintenance rate is 2.5%. The trader accepts losing $100 at the stop: entry 100.00, stop 97.50, so the position is 40 units worth $4,000. Each leverage row shows the margin it ties up, then the liquidation price and how many stop distances away it sits.

- Size, in units: 40
- Position value: $4,000
- Loss at the stop, any leverage: −$100

| Leverage | Margin | Liquidates at | Stops away |
| --- | ---: | ---: | ---: |
| 2× | $2,000 | 51.28 | 19.5× |
| 3× | $1,333 | 68.38 | 12.6× |
| 5× | $800 | 82.05 | 7.2× |
| 10× | $400 | 92.31 | 3.1× |
| 20× | $200 | 97.44 | 1.0× |

The same $4,000 position on cross with $1,000 in the account liquidates near 76.92, but then the whole $1,000 is behind it. With $10,000 in the account the formula puts liquidation below zero, until other positions start to share the balance.

## Mistakes that cost traders money

- **Reading liquidation as one over leverage.** The maintenance margin comes off the top, so the real distance is always shorter, and much shorter at high leverage. Read the liquidation price, not the leverage number.
- **Picking the leverage before the stop.** Leverage chosen first tends to drag the stop to wherever the liquidation leaves room for it. The stop belongs where the idea is wrong; leverage comes last.
- **Treating cross as safer by default.** Cross pushes liquidation away by putting more of the account behind the trade. In a backstop, every cross position and the cross margin go together.
- **Adding margin to rescue a losing trade.** Topping up an isolated position moves liquidation away, and puts more money behind an idea the stop already called wrong.
- **Forgetting that large positions change tier.** Above a market’s tier thresholds the maximum leverage drops and the maintenance rate rises, so a big position liquidates closer than the same leverage on a small one.

## Try it in BuildTrade™

Open a paper order on any perpetual with Risk-based sizing on. Keep the stop where it is and drag the leverage from 2× to the maximum: Risk if stopped stays put while Est. liquidation walks towards your stop.

Open the app: https://trade.buildtrade.app/register

## Sources

- [Liquidations](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/liquidations), Hyperliquid Docs.
- [Margining](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/margining), Hyperliquid Docs.
- [Robust price indices](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/robust-price-indices), Hyperliquid Docs.
- Trade Your Way to Financial Freedom, Van K. Tharp (2007).

BuildTrade™ is independent of, and not endorsed by, Hyperliquid or the authors and publishers of the books listed.

Web page: https://buildtrade.app/guides/how-liquidation-works-on-hyperliquid/