Perpetuals

Liquidations & Insurance Fund

When liquidation triggers

Each position (isolated margin) must maintain equity above its maintenance margin — a fixed percentage of position value per market: 1.5% on BTC, 2.4% on ETH, 6% on HYPE (see Markets & Trading Rules). Equity is measured against Hyperliquid’s mark price, the same price shown in the app.

The estimated liquidation price is displayed:

  • in the trade panel before you place an order, and
  • in the Liq. price column of your positions table, live, as margin and PnL change.

You can push your liquidation price away at any time by adding margin to a position or reducing its size.

What happens during liquidation

1

The market is frozen for your account

The freeze applies to your account only: new orders in the affected market are blocked and your resting orders in that market — including TP/SL and reduce-only orders — are cancelled. Your positions and orders in other markets, and all other traders, are unaffected. The reverse also holds: another trader’s liquidation never cancels your orders or touches your margin.

2

The position is transferred

The position and its remaining margin are taken over by the Insurance Fund at the bankruptcy price (the price at which the position’s margin is exactly exhausted). Because the trigger fires before margin is fully exhausted, the margin remaining at that moment goes to the Insurance Fund — it is, in effect, the liquidation penalty.

3

The account is settled

You lose the margin posted to the liquidated position — never more. Accounts cannot go negative on HyperFlow, and other positions and your free balance are untouched (isolated margin).

HyperFlow’s liquidation engine triggers earlier than Hyperliquid’s native engine would: it fires when equity falls to 60% of the reference initial margin, while the venue’s own engine acts at 50% (on BTC: 1.5% vs 1.25% of position value). This is a deliberate safety margin: it ensures liquidations are handled by HyperFlow’s own engine before a venue-side forced close, protecting the platform’s solvency.

Early user-level liquidation is also part of how the master account is kept healthy: the platform maintains dedicated buffer capital so it stays well above Hyperliquid’s margin requirements, and unwinding individual positions early ensures they never stress the shared account.

If the price feed is interrupted, liquidations pause rather than execute against stale prices. The engine resumes only with fresh mark data.

The Insurance Fund

The Insurance Fund is the system’s shock absorber:

  • It absorbs the gap when a position is closed worse than its bankruptcy price (e.g. in a violent move), so one trader’s bankruptcy never socializes losses to other traders.
  • It is funded by the platform, including margin recovered from liquidations.
  • If the fund were ever depleted, the platform responds in escalating tiers — warnings, then blocking new position openings, then freezing withdrawals — rather than allowing an insolvent state to grow silently.

Managing your risk

  • Watch the margin ratio and liquidation price on each position.
  • Use stop-loss orders — a stop closes your position on your terms before liquidation does it on the system’s terms.
  • Distance to liquidation is roughly 1 ÷ leverage minus the maintenance rate. On BTC (1.5% maintenance), a 20x position liquidates after roughly a 3.5% adverse move; at 5x it takes roughly 18.5%. Lowering leverage widens that distance far faster than it reduces your exposure — size accordingly.

Next: Deposits & Withdrawals