Liquidations

If your perpetual position's collateral falls below maintenance margin, the position gets liquidated — closed by the exchange at a penalty price.

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1. What triggers a liquidation

A liquidation fires when:

• Price moves against your position.
• Your account equity (collateral + unrealized PnL) falls below the maintenance margin requirement for that position.

The further from your liquidation price, the safer you are. The liquidation price depends on:

• Your entry price
• Your leverage (higher leverage = closer liquidation price)
• Your margin mode — in cross, other positions' equity buffers this position; in isolated, only the allocated collateral counts
• Funding rate accruals over time (negative funding can erode collateral on long-held positions)

See Margin and Leverage for the math.

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2. How Hyperliquid liquidates

Hyperliquid's on-chain perpetual engine handles liquidations natively. The general flow:

1. Maintenance margin breach detected — engine flags the position.
2. Liquidation order placed — engine attempts to close the position at the best available price on the book.
3. Partial vs full — depending on how far underwater the position is and book depth, the engine may close only the portion needed to restore margin (partial) or close the entire position (full).
4. Insurance fund backstop — if the close cannot be filled cleanly, the insurance fund (section 5) absorbs the shortfall.

Once the liquidation completes, the position no longer appears among your open positions.

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3. Liquidation fee

When a position is liquidated, the rail takes a penalty fee from whatever collateral remains after the close. This is on top of the adverse PnL.

The fee discourages users from running positions all the way to maintenance margin and compensates the liquidator / insurance fund for the risk of taking over a distressed position.

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4. Avoiding liquidation

Standard defensive playbook:

• Keep a margin buffer — don't open a position at exactly the maximum allowed leverage. Leave room for adverse moves.
• Use stop-losses — a stop-loss closes the position before the liquidation engine does, at a price you choose rather than a penalty fill. The order panel has no stop-loss field; ask Alphio AI in chat to set one up. See Order Types.
• Use isolated mode for risky bets — isolate the bad-outcome risk so a single trade can't drag down your whole perp account.
• Monitor funding — over multi-day holds, funding payments accrue against your collateral. Check the funding rate on the market's page under Crypto Trade ▸ Perps before holding.
• Watch your effective leverage, not just the slider — as the market moves, leverage on the remaining collateral can creep up.

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5. Insurance fund

Hyperliquid maintains an insurance fund — a pool of collateral that absorbs shortfalls when a liquidation cannot fill cleanly (e.g. flash crashes where the book is too thin to absorb the closing order at maintenance margin).

• Funded by accumulated liquidation fees and protocol allocations.
• Acts as the first backstop before any auto-deleveraging (ADL) mechanism kicks in for the broader user base.

The insurance fund is a Hyperliquid protocol-level resource; Alphio does not maintain its own.

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6. Watching your risk

Alphio does not send liquidation warnings. Your liquidation price is shown on each open position — monitor it yourself, and consider a stop-loss to exit at a price you choose rather than letting the exchange close the position.

You can also create a price-alert task near your liquidation price if you want a nudge before things get tight.