“Hypermanipulation. On October 10, 2025, the cryptocurrency market exploded. Within minutes, thousands of traders saw their positions on hyper-liquid exchanges forced out, sometimes at the best of times and often at the worst. One word ignited the community: ADL (automatic deleveraging). This analysis is brought to you by 21M ⭕, the community of crypto investors behind 25% Club. […]”, — write: businessua.com.ua
Hypermanipulation. On October 10, 2025, the cryptocurrency market exploded. Within minutes, thousands of traders saw their positions on hyper-liquid exchanges forced out, sometimes at the best of times and often at the worst. One word ignited the community: ADL (automatic deleveraging).
This analysis is brought to you by 21M ⭕, the community of crypto investors behind 25% Club .
Background: Crash on October 10, 2025 October 10, 2025 a sharp fall in the cryptocurrency market led to surge of liquidations on the open-ended trading platform Hyperliquid .
To avoid insolvency, the protocol launched a mechanism called Auto-Deleverage (ADL) : an automatic procedure which closes the most profitable positions to cover losses from liquidated accounts.
In other words: you’re in the profit, all right… and your position is short.
Absolutely nothing serious, but it becomes so when you use the so-called “delta neutral” a strategy where your position is linked to another.
Example: long position on Hyperliquid; short position on Paradex. If your Hyperliquid position is cut and the other is held, you are fully exposed to the market.
Hyperliquid wrote:
- 35,000 ADLs in a matter of minutes
- 20,000 users were affected
- 161 tokens were affected mainly BTC, ETH, SOL, HYPE
The system has been controversial, with some traders accusing Hyperliquid of “stealing” their profits by closing out their short positions just before a complete collapse. Three main voices have emerged that can be found on Twitter: @notnotstorm , @seanlippel and @fiddybps1 .
@notnotstorm thesis: “ADL has protected traders and improved their profit/loss” @notnotstorm defends hyperfluid.
He claims that the dominant narrative is false : according to network data, most short positions were closed at the lowest point which actually maximized profits.
His arguments:
- 99% of ADLs occurred during the 5-min volatility peak (around 21:16 UTC).
- Then prices rebounded, so those who remained short would lose part of their winnings .
- In other words, ADL would record the optimum PnL for most traders.
- Furthermore, without ADLs Hyperliquid took a risk become insolvent which would destroy all its positions.
@notnotstorm’s conclusion: the ADL system fulfilled its role: it protected the platform and, paradoxically, retained earnings most short traders.
@seanlippel’s response: “This is a partial and misleading view” @seanlippel, a multi-platform professional trader (Drift, dYdX, Hyperliquid) responds to @notnotstorm and accuses him of propaganda .
His main criticisms are:
- @notnotstorm analysis covers only large cap companies (BTC, ETH, SOL) while most of the damage occurred due to more volatile altcoins (ATOM, STX, APT, FET…).
- ADL for these secondary assets were launched earlier to the recovery phase, which prematurely eliminated winning positions .
- For a balanced trader who deals in selling long/short positions ADL disturbed the balance of the portfolio often leaving long positions open, leading to cascade liquidations .
In the end, Sean is judgmental structural defects :
- Absence transparency in the ADL queue
- There is none flash protection
- Oracles “one touch” (liquidation by one price tick)
- There is no significant insurance fund
- And therefore, this is systemic risk for any institutional trader.
@seanlippel’s conclusion: Hyperliquidity is not reliable for complex strategies . Opaque and rigid ADL system destroyed healthy positions, not offering the guarantees expected of an exchange of this size.
@fiddybps1 analysis: “ADL is a relic of the past” @fiddybps1 has structural reflections on patterns of exchange . He goes on challenges the very concept of ADL which is considered outdated and unsuitable for modern platforms.
The ADL system is derived from BitMEX (2017) a centralized model where each market operated on isolated margin without reviewing the user account. This system incompatible with cross margin where positions in several assets offset each other.
The consequence of this is that a trader who is long BTC / short ETH may be forced to close his winning BTC via ADL to rescue the Hyperliquid insurance fund, at the same time leaving his unprofitable ETH short position open → result: net loss despite the initially neutral position.
Consequences:
- Violation hedges and “balanced” positions (delta-neutral)
- Raised volatility due to unnecessary forced sales
- Injustice between traders according to the ADL queue
@fiddybps1 suggests another model: Socialized loss (SL).
Instead of closing positions individually, SL distributes losses between all users only if the deficit is maintained .
It:
- Conditionally : Enabled only when needed
- Reversible : Cancels if the market recovers
- Predictable and fair : the same ratio for all
- More blockchain compatibility : simple calculations, no ADL queue
Opinion 21M ⭕ 21M ⭕ is a community of crypto investors behind 25% Club a strategy designed to generate a steady return of 25% per year for 10 years without active trading.
Incident October 10, 2025 became on Hyperliquid a textbook example of risk management on cryptocurrency exchanges :
- It shows limitations of the ADL system, designed for centralized, simple and isolated markets.
- This illustrates the need for transparent cross-margin architectures able to maintain the consistency of the complete portfolio.
- And this fuels the debate between protocol protection (@notnotstorm), user experience (@seanlippel) and system integrity (@fiddybps1).
This episode illustrates it perfectly restrictions on directed and credit trade : even experienced traders working with complex long/short patterns find themselves stuck trapped in an opaque and arbitrary mechanism .
IN 21M ⭕ we advocate a different vision of efficiency: one that is based not on speculation or targeted trade and on measurable, transparent and decentralized efficiency mechanisms .
We do not promise instant profits, but stable, rational and controlled capital growth month after month.
Click here to see what we do for free This is the philosophy that guides all our decisions: zero trading, zero stress, 100% real and liquid profit.
Source: journalducoin.com
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