As reported by Chainthink, on December 10, Hyperliquid co-founder Jeff refuted claims that the ADL (Auto Deleveraging) mechanism transfers profits or losses to HLP (Hyperliquidity Provider). Jeff emphasized that ADL treats users and HLP symmetrically and does not shift gains or losses between them. He also clarified that ADL does not destroy $653 million in earnings. Hyperliquid activated the cross-margin ADL system across all major perpetual futures markets on November 28 to ensure orderly market operations during volatility. ADL acts as a backup when insurance funds are insufficient, potentially liquidating high-leverage profitable positions to cover shortfalls. Hyperliquid noted that ADL is only triggered in exceptional cases to prevent systemic chain defaults.
Hyperliquid Co-Founder Clarifies ADL Mechanism Does Not Transfer Profits or Losses to HLP
ChainthinkShare
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.