Hyperliquid’s liquidation documentation says a liquidation event occurs when a trader’s positions move against them to the point where the account equity falls below the maintenance margin, the minimum collateral needed to keep positions open. A public position record includes the venue’s estimated liquidation price, so a tracker can compare it with the current price for every large account it follows. In SuperQuant’s tracker, a very large position that sits close to that estimate produces a “liquidation radar” alert.
Those alerts attract attention because liquidations can force large market orders. That makes it tempting to read a near-liquidation position as a target, as if price were drawn toward it. The data does not support that reading. This part of the series explains how the distance is calculated, why the threshold itself moves, how the venue actually executes a liquidation, and what an alert can and cannot tell you. It builds on part one, which covers what a public position record contains.
How the distance is calculated
Distance is the gap between the current price and the liquidation price, expressed as a share of the current price. For a long position, the liquidation price sits below the market, so the distance is the current price minus the liquidation price, divided by the current price. For a short, the liquidation price sits above, and the subtraction runs the other way. SuperQuant’s radar uses the mid price, halfway between the best bid and best ask, as the current price.
| Fictional position | Current mid | Liquidation price | Distance |
|---|---|---|---|
| Long | 100.00 | 88.00 | (100 − 88) ÷ 100 = 12.0% |
| Short | 100.00 | 104.00 | (104 − 100) ÷ 100 = 4.0% |
| Long, after price falls | 92.00 | 88.00 | (92 − 88) ÷ 92 = 4.3% |
The third row shows why the denominator matters: its gap of 4.00 equals the short’s gap in the second row, but it is a larger share of a smaller price.
Why the threshold moves
A liquidation price in a position snapshot is an estimate, not a fixed line drawn when the trade opened. Hyperliquid’s margining documentation describes cross margin, which shares collateral across an account’s cross positions, and isolated margin, which constrains an asset’s collateral to that asset.
- Cross margin. The venue’s liquidation documentation says the actual liquidation price of a cross position is independent of the leverage set, and that the displayed estimate can differ from it because of funding payments or changes in unrealized profit and loss in other positions.
- Isolated margin. The liquidation documentation says an isolated position’s liquidation price does depend on leverage, because the margin allocated to it depends on the initial margin set. The margining documentation adds that isolated positions support adding and removing margin after opening, although strict isolated positions cannot have margin removed. Adding margin pushes the liquidation price away; removing it pulls the price closer.
In a fictional case, a whale whose position is “4 percent from liquidation” at one snapshot can be 9 percent away a minute later because another cross position gained, or because the owner added collateral. The cross versus isolated margin guide works through a fictional ledger showing how much these modes change the picture.
Which price the venue uses
Hyperliquid’s liquidation documentation says liquidations use the mark price, which combines external exchange prices with Hyperliquid’s own book state, and that during high volatility or on highly leveraged positions mark price may be significantly different from book price. Hyperliquid’s robust price indices page defines mark as the median of three inputs: the oracle price plus a moving average of the gap between Hyperliquid’s mid price and the oracle price, the median of Hyperliquid’s best bid, best ask and last trade, and a weighted median of perpetual mid prices on five other exchanges. A tracker that compares liquidation prices with the mid price, as SuperQuant’s does, is measuring something close to, but not identical with, what the venue uses. Near the threshold, a small gap between mid and mark can make the radar’s distance differ from the venue’s own check. The guide to mark, index and last price explains how those prices differ and why.
The liquidation documentation also describes how a liquidation is executed. Maintenance margin is half of the initial margin at the asset’s maximum leverage, which varies from 3x to 40x, so it runs from 1.25 percent for 40x assets to 16.7 percent for 3x assets. The venue first tries to close positions with market orders sent to the book. For positions larger than 100k USDC, only 20 percent of the position is sent as a market liquidation order. After a partial liquidation there is a 30-second cooldown, during which all market liquidation orders for that user are for the entire position. If account equity drops below two thirds of the maintenance margin without a successful liquidation through the book, a backstop liquidation happens through the liquidator vault, and the maintenance margin is not returned to the user. A large position near its threshold is therefore not one switch that flips; it can be reduced in steps, or taken over by the backstop rather than closed on the book.
What SuperQuant’s radar does
SuperQuant’s guide states the radar’s rule. It watches tracked positions of at least $5M and alerts when the mid price comes within 5 percent of the venue’s estimated liquidation price. After an alert, that position can alert again only once the distance has widened past 7 percent, and no more than once every six hours. The gap between 5 and 7 percent matters: without it, a position hovering near 5 percent could trigger repeated alerts as price wobbles around that level.
When a watched position disappears near its liquidation price, the snapshot alone cannot say whether the venue liquidated it or the owner closed it; only the account’s fills can show which. Even a confirmed liquidation describes what happened to one position. It does not establish that the liquidation moved the market.
What a near-liquidation alert cannot tell you
- Whether the owner will act. Adding collateral, reducing size or hedging elsewhere can all move the threshold before price gets there.
- How much would actually hit the book. For positions above 100k USDC, the first market liquidation order covers only 20 percent, and a backstop liquidation goes through the liquidator vault instead of the book, so the orders that reach the book can be smaller than the headline position size.
- Whether price “wants” to go there. A cluster of liquidation prices describes where some accounts would be forced to act. It is not evidence that price will travel to that level, and treating it as a target is a forecast the data cannot support.
- The rest of the market. The radar covers tracked accounts only. Many smaller positions, and positions on other venues, also have liquidation levels you cannot see.
A review checklist for a radar alert
- Record the coin, side, position size, liquidation price, current mid and detection time.
- Note whether the position is cross or isolated if the record shows it, and remember that a cross position’s threshold can move without any trade.
- Compare the position size with the market’s open interest, not with your own account.
- Write what you expect to happen and what would show you were wrong, before you look at the next candles.
- Check the outcome at fixed horizons and record it, including alerts where nothing happened.
For the general mechanics, read how crypto liquidation works and why a stop-loss and a liquidation are different. The next part of this series, whale consensus and crowding, moves from single positions to what happens when many tracked accounts lean the same way.
This is educational research context, not investment advice.