Liquidations
Overview
Boosted positions operate under a dual-layer liquidation framework designed to protect both trader collateral and vault capital.
The first layer is an automated protocol stop loss placed by Onyx at the time a boosted position is opened. This mechanism is designed to close the position before losses consume borrowed funds.
Hyperliquid’s native liquidation engine operates as an additional system-level safeguard, serving as a backstop within the overall risk framework.
All boosted positions operate under isolated margin only. Each position’s collateral and risk are fully compartmentalized and cannot impact other balances or positions within the account.
Protocol Stop Loss
When a boosted position is opened using borrowed capital, Onyx automatically places a protocol-managed stop loss order.
This stop loss is structured to:
Ensure repayment of borrowed capital
Include a defined price buffer
Account for estimated execution costs
The protocol stop loss is positioned such that it triggers before the Hyperliquid native liquidation price would be reached under normal market conditions. Its purpose is to close the position in a controlled manner while preserving vault solvency.
Protocol Stop Loss Calculation
The stop loss level is derived to ensure the vault can recover:
Borrowed amount
Asset-specific price buffer
Estimated fees
Components
Price Buffer
Price buffer = entry price × position size × asset-specific SL buffer
This buffer accounts for expected adverse movement based on the asset’s volatility profile.
Estimated Fees
Estimated fees = 0.25% of the borrowed amount
This functions as a slippage allowance during execution.
Cushion
Cushion = (total capital − minimum repayment value) ÷ position size
Where minimum repayment value includes borrowed capital, buffer, and estimated fees.
Final Stop Loss Price
For long positions: SL price = entry price − cushion
For short positions: SL price = entry price + cushion
This structure ensures sufficient coverage to repay vault obligations before deeper liquidation thresholds are reached.
SL Buffer by Asset
Higher-volatility assets are assigned larger buffers to account for rapid price movements and potential slippage.
BTC
0.75%
ETH
1.00%
SOL
1.25%
HYPE
1.25%
XPL
4.00%
XYZ100
1.50%
NVDA
2.00%
GOOGL
2.00%
User Stop Loss vs Protocol Stop Loss
Users may set their own stop loss when opening or managing a boosted position. However, the user-defined stop loss must be positioned more conservatively than the protocol stop loss.
For long positions, the user stop loss must be higher than the protocol stop loss.
For short positions, the user stop loss must be lower than the protocol stop loss.
If no user-defined stop loss is set, the protocol stop loss remains active as the default safety mechanism.
The protocol stop loss cannot be removed while borrowed capital remains outstanding.
Hyperliquid Native Liquidation (Backstop)
If the protocol stop loss does not execute due to extreme slippage, liquidity gaps, or sudden market dislocations, Hyperliquid’s native liquidation engine acts as the final backstop.
Hyperliquid liquidation triggers when account equity falls below the required maintenance margin. At maximum leverage, maintenance margin is 50% of initial margin.
In this scenario:
The position is force-closed at market
Execution may occur under stressed conditions
Any resulting shortfall may create bad debt
This layer exists to protect the broader system in tail-risk events.
Position Close Types
A boosted position may be closed through one of the following mechanisms:
User Exit — the trader closes the position manually or via their own take-profit or stop-loss order
Protocol Stop Loss — Onyx’s automated stop loss triggers to protect vault capital
Hyperliquid Liquidation — Hyperliquid’s native liquidation engine force-closes the position
Important Notes
The protocol stop loss is active only on boosted positions that utilize borrowed capital.
Non-boosted positions follow standard Hyperliquid liquidation mechanics.
The liquidation price displayed in the terminal for boosted positions reflects the protocol stop loss level.
Boosted positions do not support cross margin. All positions are isolated by design.
The dual-layer structure ensures that boosted leverage remains capital efficient while maintaining strict risk controls at both the protocol and venue levels.
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