In a decisive move to fortify its trading framework, Hyperliquid, a prominent blockchain network focused on trading, has announced an increase in margin requirements for its traders. This development follows a significant event on March 12, during which the platform’s liquidity pool, known as HLP, sustained a staggering loss of $4 million due to a trader deliberately liquidating a large Ether (ETH) position worth approximately $200 million.
Starting from March 15, traders will be required to maintain a collateral margin of at least 20% on certain open positions. This adjustment aims to mitigate the systemic impact of substantial trades that could hypothetically affect market dynamics upon closure. The incident underscores the evolutionary challenges Hyperliquid faces, having risen to prominence as a leading platform for leveraged perpetual trading in the Web3 ecosystem.
According to Hyperliquid, the recent loss was not attributed to any exploit but was a foreseeable consequence of the trading mechanics operational during extreme market conditions. The company commented, “[Y]esterday’s event highlighted an opportunity to strengthen the margining framework to address extreme conditions more robustly.” Importantly, these new margin requirements will apply under specific circumstances, particularly when traders withdraw collateral from their open positions, while allowing for new positions with leverage of up to 40 times.
For context, perpetual futures, commonly referred to as “perps,” are leveraged contracts that do not expire, requiring traders to deposit collateral—typically in the form of USDC—to secure their positions. The transaction that led to the liquidity pool’s loss involved a trader extracting most of their collateral and liquidating their own trade without incurring slippage, meaning the negative impacts of the large liquidation were absorbed by Hyperliquid’s liquidity pool.
As of March 13, Hyperliquid’s HLP has reported a total value locked (TVL) of approximately $340 million, according to DefiLlama. Launched in 2024, Hyperliquid’s flagship perpetual exchange has quickly claimed around 70% of the market share, outperforming competitors like GMX and dYdX, as stated in a January report by a well-known asset manager. The platform is designed to compete with centralized exchanges by offering fast settlement times and low fees, although it operates with a slightly lower degree of decentralization than some of its counterparts.
As of the latest reports, Hyperliquid boasts a transaction volume of roughly $180 million per day, further asserting its position in the highly competitive DeFi landscape. The exchange’s proactive approach in addressing extreme market conditions through enhanced margin requirements reflects its commitment to maintaining a stable trading environment for its users.
