Hyperliquid co-founder: ADL will not transfer profits and losses to HLP, and its handling of users and HLP is completely symmetrical.

On December 10, Hyperliquid co-founder Jeff published a post refuting the view that “ADL (Auto-Deleveraging mechanism) transfers profits and losses to HLP.” Jeff stated that the ADL mechanism does not transfer profits and losses to HLP (Hyperliquidity Provider), and its handling of users and HLP is completely symmetrical. ADL also does not destroy $653 million in profits. On November 28, Hyperliquid enabled the cross-margin Auto-Deleveraging (ADL) liquidation system across all its major perpetual contract markets to ensure orderly market operation during periods of extreme volatility, especially when liquidity tightens or large positions approach liquidation. When the insurance fund cannot fully absorb the losses from liquidated positions, ADL (Auto-Deleveraging mechanism) acts as a backup liquidation method. In such cases, the positions of profitable traders with high leverage and high unrealized gains may be partially or fully reduced to cover the shortfall. Hyperliquid emphasized that ADL will only be triggered in exceptional circumstances, and its design aims to maintain market integrity by preventing a chain of defaults that could potentially disrupt the entire ecosystem.