What is liquidation in crypto futures?

The forced closing of a leveraged position when its margin can no longer cover losses.

When the price reaches the liquidation price, the account no longer has enough margin to keep the position open, and the exchange closes it. The trader loses the margin backing the position.

On Hyperliquid a liquidation first goes to the order book as a market order. If the book cannot absorb it, the position is taken over by the liquidator vault that is part of HLP.

Liquidations close positions with market orders: liquidated longs sell, liquidated shorts buy. That pushes the price further and can trigger a chain of liquidations — a long squeeze or a short squeeze.

On HyperScan

HyperScan records liquidations of tracked wallets and shows where the next ones are on the liquidation map.