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Hyperliquid Response to XPL Price Surge: No technical issues or defaults have occurred on the platform, and users are advised to be mindful of the risks on their own.
BlockBeats News, August 27th, the Hyperliquid team announced on their Discord channel that today the XPL market experienced significant volatility, with the token price surging approximately 2.5x in a matter of minutes. During this period, the Hyperliquid blockchain operated as intended without any technical issues: it first executed liquidations according to the order book, then triggered the Automatic Deleveraging (ADL) mechanism as per the public protocol. Hyperp employs a fully isolated margin system, where all user gains and losses are isolated from other asset positions. This liquidation and ADL event only impacted XPL positions, with no protocol insolvency.
The pre-listing market itself carries inherent unpredictability. The robust mark price formula used by Hyperp effectively prevents flash surges, requiring the order book price to sustain a high level for several minutes before triggering liquidation.
Hyperliquid is a permissionless multi-market protocol, with each market presenting unique risk features. Users are strongly advised to familiarize themselves with the operation of markets like hyperp by reading the documentation and implementing appropriate risk management before trading. All hyperp products come with risk warnings, alerting users to low liquidity, high volatility, and increased liquidation risk.
Finally, some users have proposed using high collateral positions for shorting. After the next network upgrade, the hyperp mark price will be capped within 10x of the 8-hour mark price EMA. While this condition has never neared triggering, it establishes a mathematical boundary for liquidation prices for over-collateralized short positions. The 8-hour EMA has been publicly disclosed as the on-chain and API price feed for Hyperp. It is important to note that this upgrade does not alter any of today's liquidation or ADL outcomes but aims to encourage liquidity provision during periods of volatility. Different user suggestions come with their own risk vectors, and the optimal solution is to introduce more liquidity to these markets to mitigate volatility impact.
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