@tarunchitra ↔ @danrobinson conversation

13 views Dec 11, 2025 ~1 min read

Tarun Chitra@tarunchitra

As another large HYPE holder accused me yesterday: "show me the tweet/paper, and I'll show you the bags"

There are a few things here that are worth pointing out, despite everyone FUDing, not reading the paper, and making conclusions based on the post (skill issue? illiteracy?)

Dan Robinson@danrobinson

This paper is simply wrong about its central topic: how Hyperliquid’s ADL works.

Tarun is describing a different (much crazier) algorithm, which also might explain how he calculated that traders somehow paid $653m to cover a $23m deficit.

🧵

Tarun Chitra@tarunchitra

In this figure I keep the square shaded to handle the case that the water-filling is correct (e.g. it only liquidates the correct amount of PNL)

I was unable to find that in the data — if there is proof they were partially closed, that'd be awesome

Dan Robinson@danrobinson

This is the paper’s explanation of how Hyperliquid ADL works (shown in chart and in Greek):

* Sort all accounts by PNL*leverage
* Go down the list
* Apply a 100% “haircut” to the equity in each account...
* Until the $ recovered match the $ lost in the bad liquidations

Tarun Chitra@tarunchitra

If the perpetuals exchange were decentralized, I should be able to see the code and verify this! It is not public for Hyperliquid

Decentralized exchange should have public, verifiable ADL policies

x.com/DeanEigenmann/…

Tarun Chitra@tarunchitra

Drift's implementation of pro-rata is public, should you want to go into minutiae without making blanket statements about why equity weighting is wrong (w/o proposing *why* position size is better, especially in fairness terms)

github.com/drift-labs/pro…

Dan Robinson@danrobinson

The paper has some other mistakes.

It presents pro-rata ADL as an alternative, a mechanism that I prefer too.

But it misdescribes that algorithm in a similar way: it says haircuts are proportional to the equity of the account, rather than the position size.

Tarun Chitra@tarunchitra

I spent the last two months writing this non-stop; I agree I probably could've made it more legible, but I at least tried to formalize a market phenomena that people ignored (at best)

People are up in arms it because it gets at something real, even if its style is imperfect

Dan Robinson@danrobinson

This paper has gotten a lot of attention, both positive and negative, but I haven't seen someone point this out.

I don't really mind reading difficult papers, though I try not to write them.

But I think this is a good reason to try to make your papers easier to understand!

Dan Robinson@danrobinson

Did you read this two-paragraph page on their docs?

If so, why didn't you address that their description of ADL does not match yours?

hyperliquid.gitbook.io/hyperliquid-do…

@tarunchitra ↔ @danrobinson conversation

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