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.

You can watch this happen in real time on the perp positions panel — the position transitions to closed with a liquidated status.

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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.

warning

The exact liquidation fee rate (e.g. a fixed bps of position notional, or a tier based on how deep underwater the position was) is set by Hyperliquid and can change. Treat this section as conceptual — refer to Hyperliquid's published docs and your post-liquidation order detail for the exact charge applied.

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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 control rather than a penalty fill. 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 leg in the Trade Modal 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. Alphio AI liquidation alerts

Alphio AI watches your open perpetual positions and sends an alert when one approaches its maintenance threshold. These flow through the AI_ALERT notification category — same delivery channels as your other AI alerts (in-app inbox, push, optional Telegram).

The alert fires ahead of the liquidation engine so you have time to react:

• Add collateral
• Reduce position size
• Close manually at a controlled price
• Move a stop-loss tighter

You can configure how aggressive the warning is (closer to liquidation = louder, or earlier warnings with more buffer) in your notification settings, alongside the other AI_ALERT categories.

warning

Exact thresholds, frequency caps, and which surfaces deliver the warning by default (in-app vs push vs Telegram) are being finalized. The notification settings page is authoritative.