Auto-deleveraging

Auto-deleveraging strictly ensures that the platform stays solvent. If a user's account value or isolated position value becomes negative, the users on the opposite side of the position are ranked by unrealized pnl and leverage used.

How Auto-Deleveraging Works

Backstop liquidated positions have no special treatment in the ADL queue logic. The specific sorting index to determine the affected users in profit is:

(mark_price / entry_price) * (notional_position / account_value)

Those traders' positions are closed at the previous mark price against the now underwater user, ensuring that the platform has no bad debt.

Platform Solvency

Auto-deleveraging is an important final safeguard on the solvency of the platform. There is a strict invariant that under all operations, a user who has no open positions will not socialize any losses of the platform.

For more details, see: Hyperliquid Trading Auto-deleveraging