major narrative violation: hyperliquid ADL actually INCREASED PnL...
storm@notnotstorm
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Nov 02, 2025
~2 min read
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major narrative violation:
hyperliquid ADL actually INCREASED PnL for the vast majority of shorts last week
many ppl are sour that ADL closed shorts right before prices nuked. but the data reveals that most ADL hit near the price bottom, locking in near-optimal profits
hyperliquid ADL actually INCREASED PnL for the vast majority of shorts last week
many ppl are sour that ADL closed shorts right before prices nuked. but the data reveals that most ADL hit near the price bottom, locking in near-optimal profits
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when did ADL happen?
on 2025-10-10, hyperliquid performed ADL 35K times across 20K users and 161 coins
99% of these ADL’s occurred during a 5 minute period starting around 21:16 UTC
on 2025-10-10, hyperliquid performed ADL 35K times across 20K users and 161 coins
99% of these ADL’s occurred during a 5 minute period starting around 21:16 UTC
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how do these ADL events line up with price action?
nearly all tokens had a chart like the BTC chart shown below:
1) there was a big singular nuke 2) the 5-minute ADL wave occurred mid-nuke 3) the price rebounded afterward
nearly all tokens had a chart like the BTC chart shown below:
1) there was a big singular nuke 2) the 5-minute ADL wave occurred mid-nuke 3) the price rebounded afterward
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what did this look like for other tokens?
all had a similar shape to BTC’s chart, but varying in the speed and extent of price recovery
all had a similar shape to BTC’s chart, but varying in the speed and extent of price recovery
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how would PnL be affected if HL’s ADL’d shorts remained open?
for each token there was a narrow window where keeping the short open would have improved PnL
but it's likely that most shorts would've stayed open beyond this window, thus decreasing PnL
for each token there was a narrow window where keeping the short open would have improved PnL
but it's likely that most shorts would've stayed open beyond this window, thus decreasing PnL
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a few big caveats:
- this would be a completely different story if the prices continued to nuke instead of rebound
- without ADL the platform would become insolvent, which would also hurt PnL
- ADL still had undesirable effects beyond raw PnL, like breaking neutral strategies
- this would be a completely different story if the prices continued to nuke instead of rebound
- without ADL the platform would become insolvent, which would also hurt PnL
- ADL still had undesirable effects beyond raw PnL, like breaking neutral strategies
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any other measures of total ADL impact?
hyperliquid ADL’s closed $2.1B of shorts (30% BTC, 20% ETH, 13% SOL, 9% HYPE). 99.9% of ADL happened to shorts rather than longs
most closed positions were <$100K in size, but also most of volume came from positions >$100K in size
hyperliquid ADL’s closed $2.1B of shorts (30% BTC, 20% ETH, 13% SOL, 9% HYPE). 99.9% of ADL happened to shorts rather than longs
most closed positions were <$100K in size, but also most of volume came from positions >$100K in size
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how did ADL's on HL compare to ADL’s on Binance?
not possible to say. binance withholds ADL data and it also doesn’t release complete liquidation data during bursty periods
this type of analysis is only possible using the transparent accounting of public blockchains
not possible to say. binance withholds ADL data and it also doesn’t release complete liquidation data during bursty periods
this type of analysis is only possible using the transparent accounting of public blockchains
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tldr
during the October-2025 market crash, the biggest complaint about HL was that its ADL mechanism robbed the shorts of PnL
the opposite was true: HL's ADL increased the raw PnL of most shorts by closing those positions near the price bottom
during the October-2025 market crash, the biggest complaint about HL was that its ADL mechanism robbed the shorts of PnL
the opposite was true: HL's ADL increased the raw PnL of most shorts by closing those positions near the price bottom
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(thank you to @yq_acc @SoskaKyle @FrankieIsLost @cobie for input)