COINOTAG News reported that Hyperliquid co-founder Jeff addressed questions about the Automatic Deleveraging Mechanism (ADL). He stated that the ADL does not transfer profits or losses to the Hyperliquidity Provider (HLP) and that the treatment of users and the HLP is symmetrical. Jeff clarified that the mechanism will not erase a reported $653 million profit, underscoring the robustness of the platform’s risk controls for leveraged traders.

On November 28, Hyperliquid enabled the Cross-Margin ADL on major perpetual contract markets to support orderly operations during extreme volatility and liquidity tightening. The ADL serves as a backstop when the insurance fund cannot absorb losses; in such scenarios, highly leveraged positions with sizable unrealized profit may be partially or fully deleveraged to cover the capital gap, preserving market integrity and preventing a chain default.