Two months have passed since the crypto market plunge on October 10, when 19 billion dollar positions were liquidated. Tarun Chitra, CEO of Gauntlet, noted that the common automatic deleveraging (ADL) mechanism led to massive losses on Hyperliquid.
In a lengthy article, Chitra said more than $650 million was automatically deleveraged from profitable traders positions, an amount he said was 28 times the potential bad debt faced by the exchanges.
This "massacre of innocents" could supposedly have been averted by the new ADL algorithms detailed in a 95-page report.
Chitra defines automatic deleveraging (ADL) as an "ultimate backstop" - a mechanism that compensates for bad debts arising from insolvent positions by "reducing the value of the position" to profitable traders' positions.
This set of "queuing algorithms" has been in use for ten years and is currently widely adopted by Binance, Hyperliquid, Lighter and other perpetual contract platforms.
Report: Outdated Algorithm Causes Hyperliquid Platform Additional Loss of $650 million
2025-12-11 03:54:48
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