A liquidation fee is a contract-specific charge associated with a forced position close. It is separate from the position’s price loss. Some venues do not charge a separate liquidation fee.
Use the live tools
The amount and its calculation basis must come from the exact product rules. A percentage of position notional is not interchangeable with a percentage of remaining margin.
Separate the cost components
A liquidation can involve price losses, trading charges, execution differences, and a separate fee or collateral-transfer process. The remaining balance depends on the venue’s mechanism.
Separate the loss from the liquidation charge
The adverse move before and during the close
Applicable trading fees and the actual fill price
Any stated charge, collateral transfer, or backstop treatment
Do not estimate the charge from a generic CEX or DEX label. The same operator can use different rules for different contracts and account modes.
Verify the fee basis
Record the fee rate, the amount it applies to, and any contract-specific cap or minimum. Also check whether the quoted charge includes ordinary trading fees.
| Hypothetical basis | Assumed rate | Calculation | Charge |
|---|---|---|---|
| $10,000 position notional | 0.5% | $10,000 × 0.005 | $50 |
| $1,000 remaining margin | 0.5% | $1,000 × 0.005 | $5 |
These are arithmetic examples, not venue fee schedules. The same percentage produces a tenfold difference because the bases differ.
Read the liquidation mechanism
Hyperliquid’s documentation states that it has no clearance fee on liquidations. It distinguishes order-book liquidation from a backstop transfer to the liquidator vault.
A successful book close can leave collateral with the trader. During a backstop liquidation, the maintenance margin is not returned. That is different from describing all liquidations as a taker fee paid to HLP.
How forced closes can amplify a move
- Mark price falls
Equity declines on an exposed long position.
- Maintenance requirement is breached
The venue applies its liquidation rules.
- Positions are reduced or transferred
Book-based closing orders can consume bid liquidity.
- Further price pressure is possible
The result depends on available liquidity and other market activity.
The diagram describes one possible book-based sequence. Pool-based protocols use their own price, collateral, and settlement rules.
Understand the role of auto-deleveraging
Auto-deleveraging can reduce positions on the opposing side when a venue applies its loss-handling rules. The trigger and ranking are venue-specific.
For example, Hyperliquid’s ADL rules describe negative account or isolated-position value and ranking opposing positions. Do not assume every system first exhausts an insurance fund.
Review the position before a forced close
Check equity, maintenance requirements, and the mark price used by the venue. Include funding and other holding costs in the review.
A stop order can request an earlier exit, but it cannot guarantee a fill or cap the loss. The liquidation guide explains the distinction.
Use the cost comparison for its covered execution inputs. It does not replace the venue’s liquidation rules or establish a universal liquidation fee.
Is a liquidation fee always charged on remaining margin?
No.
The basis depends on the contract. It can differ from remaining margin, and some venues have no separate liquidation fee.
Is all margin always lost in a liquidation?
No universal rule applies.
Execution, remaining equity, partial liquidation, and backstop transfers can produce different outcomes.
Does Hyperliquid charge a fixed liquidation penalty?
Its documentation states that it has no liquidation clearance fee.
Backstop liquidation can still transfer collateral that is not returned to the trader.