Hyperliquid Raises Margin Limits After $4M Liquidity Loss

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Hyperliquid Raises Margin Limits After $4 Million After Liquidity Loss

Written by Aaron S.,

Editor-In-Chief

Last Updated: March 14, 2025

Key Takeaways

Hyperliquid is increasing margin requirements after a $4 million loss from an Ethereum liquidation;
Starting March 15, traders withdrawing collateral from open positions must hold at least 20%.
Despite the new rule, traders can still open new positions with up to 40x leverage.

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Hyperliquid Raises Margin Limits After $4 Million After Liquidity Loss

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Hyperliquid, a decentralized exchange (DEX), is making changes to its trading rules after a major Ethereum ETH $2,932.21 liquidation caused a $4 million loss in its liquidity pool.

The platform announced that starting March 15, some traders will need to hold at least 20% collateral on open positions to help prevent similar incidents in the future.

The decision follows an event on March 12, when a trader closed a $200 million long position in Ethereum. The trader avoided slippage, the typical loss from selling a large amount at once, by pulling out most of their collateral before closing the position. Instead, the impact fell on Hyperliquid’s liquidity pool (HLP), which had to cover the losses.

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Hyperliquid clarified that this was not an exploit but rather a result of how the platform operates under extreme conditions. The company acknowledged that the situation exposed weaknesses in its margin framework.

The updated collateral requirement will apply when traders withdraw funds from open positions. However, they will still be able to open new trades with up to 40x leverage. The change is aimed at reducing risks linked to large liquidations that could disrupt the market.

On Hyperliquid, traders use perpetual futures, or "perps", which allow leveraged positions without an expiration date. These trades require collateral—typically USD Coin USDC $0.9993 —to secure positions.

Meanwhile, Binance announced on March 3 that it would stop offering several stablecoins to users in the European Economic Area (EEA). Why? Read the full story.