ChainThink report, December 10: Hyperliquid co-founder Jeff published a statement refuting the claim that "ADL (Automatic Deleveraging) transfers profits and losses to HLPs." Jeff emphasized that the ADL mechanism does not transfer profits or losses to HLPs (Hyperliquidity Providers); it treats users and HLPs symmetrically. Furthermore, ADL does not destroy the $653 million in profits.

On November 28, Hyperliquid activated its cross-margin Automatic Deleveraging (ADL) liquidation system across all major perpetual contract markets to ensure orderly market operation during periods of extreme volatility—particularly when liquidity tightens or large positions approach liquidation. When insurance funds fail to fully absorb the losses from liquidated positions, ADL functions as a backup liquidation mechanism. In such scenarios, highly leveraged, high-unrealized-profit long positions may be partially or fully reduced to cover the funding shortfall. Hyperliquid stresses that ADL is triggered only under exceptional circumstances and is designed to preserve market integrity by preventing cascading defaults that could jeopardize the entire ecosystem.