Hyperliquid is an L1 where validator oracles shape perpetual liquidations

Liquidation begins at the mark price, not the last trade

The liquidation engine compares account equity with maintenance margin at the mark price, rather than waiting for the last traded price. Maintenance margin equals half the initial margin at an asset's maximum leverage; across maximum leverage settings from 3x to 40x, the base maintenance rate runs from 16.7% down to 1.25%.

When equity falls below the required level, the system sends a market order to close the position through the public book. For a liquidatable position larger than 100,000 USDC, the first market liquidation order is limited to 20% of the position. A partial liquidation starts a 30-second cooldown; during that interval, any subsequent market liquidation order for that account uses the full remaining position.

Account equity below two-thirds of maintenance margin activates the Hyperliquidity Provider liquidator vault when the book has not restored sufficient margin. A cross-margin backstop transfers the cross positions and cross collateral together, whereas an isolated backstop transfers only that position and its assigned margin. Funding payments and profit or loss on other cross positions keep the displayed liquidation estimate moving after entry.

Fund the right ledger before placing an order

The entry path begins with a compatible EVM wallet and quote collateral for the selected market. The native Hyperliquid bridge credits USDC from Arbitrum once signatures exceed two-thirds of validator stake, and the minimum credited deposit is 5 USDC. MetaMask and Rabby both provide the typed-message signing needed to connect and enable trading.

Arbitrum deposits require ETH for network gas, while enabling trading and submitting HyperCore orders use signatures rather than per-order gas payments. A withdrawal back to Arbitrum deducts a fixed 1 USDC gas fee and does not require the user to hold Arbitrum ETH. Unified account mode presents one balance per asset for most users; standard mode separates spot, validator-perp, and builder-DEX balances for tighter accounting control.

HyperCore makes the order book part of consensus

HyperCore keeps a price-time-priority order book for each listed asset inside L1 state. HyperBFT gives orders, cancels, fills, and liquidations one-block finality, so every participant reads the same committed sequence after execution.

Each valid price is an integer multiple of the market's tick size, and each quantity is an integer multiple of its lot size. Better prices match first; orders at the same price match in arrival order. The clearinghouse checks margin when an opening order arrives and checks the resting side again at the moment of a match, preventing an outdated order from bypassing a changed margin requirement.

Block processing separates actions into 3 semantic groups: actions without GTC or IOC orders, cancellations, and actions that place GTC or IOC orders. Cancellations therefore reach execution before new GTC and IOC actions proposed in the same block. Uniswap prices spot swaps against liquidity pools; this architecture exposes explicit bids and asks familiar from an exchange order book.

Validator oracle submissions shape margin and trigger orders

The oracle system supplies the clearinghouse with a reference that resists a single venue's transient print. Each validator publishes spot oracle prices every 3 seconds, and the clearinghouse takes a stake-weighted median across validators.

For externally traded assets, each validator first builds a weighted median from 8 sources. Binance carries weight 3; OKX and Bybit carry weight 2 each; Kraken, KuCoin, Gate, MEXC, and the local spot book carry weight 1. The source set changes by asset: BTC excludes the local book because its primary liquidity sits elsewhere, while HYPE relies on local liquidity before external inputs qualify.

The mark price combines oracle information with HyperCore book state. Margining, liquidations, and take-profit or stop-loss triggers read that mark, not a lone last trade. A temporary gap between the visible midpoint and the mark therefore changes execution expectations: an order may fill at the book while the collateral test still follows the validator-derived reference.

Spot, validator perps, and HIP-3 serve different exposures

The market type determines what the account owns and who defines the contract. HIP-1 spot markets transfer native fungible-token balances, validator-operated perpetuals create linear long or short positions, and HIP-3 lets builders operate separate perpetual DEXs with their own collateral, oracle definitions, leverage limits, and settlement controls.

A spot purchase of HYPE leaves the account holding HYPE. A BTC perpetual instead represents 1 unit of BTC price exposure per contract unit, has no expiry, and realizes profit or loss in collateral without delivering Bitcoin. The default validator-operated perpetual venue uses USDC margin, while a HIP-3 venue selects an eligible quote asset as collateral.

HIP-2 adds a consensus-level liquidity strategy for new HIP-1 spot books, alongside orders from independent market makers. The Hyperliquidity Provider, or HLP, runs protocol strategies that quote markets and backstop liquidations. These components support three common tasks: direct spot exchange, leveraged directional or hedging positions, and liquidity provision with strategy profit-and-loss exposure.

Trading fees and hourly funding hit different balances

Trading fees attach to matched orders, while perpetual funding passes directly between long and short holders. Funding settles every 1 hour; its fixed interest input is 0.01% per 8 hours, equivalent to 0.00125% per hour, and the premium component reflects the contract's distance from its oracle.

The protocol samples that premium every 5 seconds and caps the final funding rate at 4% per hour. A positive rate transfers value from longs to shorts; a negative rate reverses the direction. The payment equals position size multiplied by oracle price and the hourly funding rate, so leverage changes funding exposure only by changing position notional.

Fee tiers use rolling 14-day weighted volume, with spot volume counting 2 times. At tier 0, base perpetual taker and maker rates are 0.045% and 0.015%; base spot rates are 0.070% and 0.040%. Higher volume tiers, maker rebates, and HYPE staking discounts modify those rates, but funding remains a separate peer-to-peer cash flow.

Cross and isolated margin assign losses differently

Cross margin shares collateral across all cross positions, whereas isolated margin confines collateral to one position. Cross is the standard margin mode inside a DEX; isolated mode limits a liquidation in one market from consuming collateral assigned to another isolated position.

Leverage is set as an integer from 1x to the asset's maximum, and opening margin equals position notional divided by leverage. Changing the leverage setting on an existing cross position does not itself change the actual liquidation price because the cross account shares one collateral pool. For isolated margin, the setting changes assigned margin and therefore moves the liquidation boundary.

Removing margin faces a second constraint: the remaining amount must satisfy the initial margin requirement and retain at least 10% of total open notional. Unified account mode extends shared balances across supported spot and perpetual activity, while portfolio margin adds borrowing and collateral offsets in a pre-alpha mode. Those modes widen the set of positions affected by one account-level margin calculation.

HyperBFT secures both HyperCore and HyperEVM

HyperBFT is the stake-weighted consensus system shared by the exchange engine and the smart-contract environment. HyperEVM is part of the same chain rather than a separate rollup, uses chain ID 999, and runs Ethereum-compatible contracts with HYPE as gas.

The HyperEVM follows the Cancun execution rules without blobs and represents HYPE with 18 decimals. Its EIP-1559 base fees and priority fees are burned. This gives Ethereum tools a familiar execution model, but moving an asset between HyperCore and HyperEVM remains an explicit ledger transfer; a spot balance does not automatically appear inside a smart contract.

A consensus quorum requires more than two-thirds of total stake. An active validator provides 10,000 HYPE of self-delegation locked for 1 year, ordinary delegation has a 1-day lock, and a staking-account transfer back to spot enters a 7-day queue with at most 5 pending withdrawals per address. Interface access rules remain separate from this protocol security boundary, so wallet control does not guarantee service from every browser interface.

dYdX, GMX, and Coinbase change who controls settlement

Venue selection turns on execution design and custody rather than a single feature score. HyperCore and dYdX Chain both pair self-custody with order-book trading; GMX V2 routes perpetual positions through contracts and liquidity pools; Coinbase Advanced operates a centralized order book inside a custodial account.

On Hyperliquid, the order book, margin engine, and settlement share one consensus boundary. dYdX offers a separate app-chain approach, while GMX favors pool-based liquidity and oracle execution over continuous price-time matching. Coinbase supplies fiat integration and managed account recovery, but the operator controls custody and account access. The useful comparison is therefore who can move funds, who sequences trades, and where market state becomes final.

Order instructions and account boundaries improve control

Order instructions determine whether a signed intent rests, takes available liquidity, or closes only existing exposure. The main controls map to distinct execution outcomes:

• A market order seeks immediate execution against available book depth.
• A limit order sets the worst accepted price and may remain unfilled.
• GTC keeps a limit order open until fill or cancellation.
• IOC fills available quantity immediately and cancels the remainder.
• ALO posts as maker liquidity, while reduce-only forbids position growth.

Time-weighted average price orders submit a child order every 30 seconds with maximum slippage of 3%. When fills fall behind schedule, a later child order grows to no more than 3 times its normal size. That rule controls each attempt, yet thin depth still leaves part of the parent order unfinished.

Subaccounts separate positions and margin while contributing volume to the master account's shared fee tier. Automated traders may authorize agent wallets that sign without holding account funds: one unnamed agent and up to 3 named agents belong to a master account, with 2 additional named agents per subaccount. Queries must still use the master or subaccount address. This division keeps strategy state, collateral scope, and signing authority legible as activity grows.