Hyperliquid’s Co-founder Denies ADL Revenue Destruction Claim

2 mins mins

Key Points:

Jeff Yan denies ADL shifts PnL onto HLP LPs.
Mechanism said to protect user and systemic stability.
ADL generated user profits in prior events instead.

Hyperliquid co-founder Jeff Yan refuted accusations that the Automatic Liquidation mechanism transfers profits and losses to Hyperliquidity providers, asserting that it treats users and providers symmetrically.

Jeff Yan’s clarification aims to address community concerns and maintain trust in Hyperliquid’s system, impacting how traders perceive fairness and transparency.

ADL Allegations and Jeff Yan’s Defense

Hyperliquid co-founder Jeff Yan has confronted allegations suggesting the Automatic Liquidation (ADL) feature unfairly impacts Hyperliquidity Providers (HLPs). This public denial addresses concerns around operational transparency and highlights how ADL’s design supports trader outcomes without favoring liquidity providers. Jeff’s statement emerges amid a backdrop of scrutinized exchange mechanics. The refuted claims were centered on the idea that ADL disproportionately influences financial positions of protocol participants. Hyperliquid has emphasized that ADL’s structure enables balanced treatment across stakeholders and aligns with precedents seen in centralized exchanges. Jeff’s remarks aid in clarifying confusion about the protocol’s revenue structure and stakeholder treatment.

Jeff’s assertions have prompted a multitude of reactions from industry leaders. Tarun Chitra described Hyperliquid’s ADL rules as “textbook aggressive,” highlighting potential tensions in decentralized trading dynamics. Conversely, Jeff insists the design offers net benefits for traders and mitigates systemic risk.

“The ADL mechanism treats users and HLP symmetrically and does not ‘destroy’ hundreds of millions in revenue.” — Jeff Yan, Founder, Hyperliquid

Price Volatility and Market Reactions

Did you know? In past events, Hyperliquid’s ADL mechanism has reportedly generated substantial net profits for traders, showcasing a unique balance between protocol efficiency and user benefits.

Based on data from CoinMarketCap, as of December 10, 2025, Hyperliquid’s native token HYPE trades at $28.22, reflecting a market cap of $9.50 billion. The 24-hour trading volume stands at $402 million, down 3.56% over the period. Over the past 90 days, HYPE has witnessed a notable decline of 49.11%, indicating significant volatility and market challenges.

hyperliquid-daily-chart-62 — Hyperliquid(HYPE), daily chart, screenshot on CoinMarketCap at 02:32 UTC on December 10, 2025. *Source: CoinMarketCap*

Analysts from Coincu Research note that Hyperliquid’s ADL mechanism’s structure parallels those of major exchanges, aiming for systemic stability. They expect trader-focused protocols to remain appealing amidst growing regulatory attention on liquidation procedures.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.