Cross Margin vs Isolated Margin
How shared and ring-fenced collateral change liquidation risk on Hyperliquid.
Cross and isolated margin decide how much collateral a perpetual position can draw from when it loses money. Cross margin shares a pool of account equity across positions in the same margin scope. Isolated margin assigns a separate collateral amount to one position.
The choice changes how losses propagate through the account.
Cross margin shares both support and failure
With cross margin, open positions draw from the same available collateral. A profitable position can increase the equity supporting another position, while a losing position can consume collateral that was helping support the rest of the account.
This makes capital use more efficient because margin does not sit idle behind each trade. It also makes position level risk harder to read in isolation.
Suppose a trader holds a BTC long and an ETH short in the same cross margin scope. If the BTC position loses heavily, the account can use available equity that would otherwise have supported the ETH trade. The ETH position may be profitable and still be affected by the shrinking shared buffer.
Isolated margin creates a defined loss boundary
An isolated position has a dedicated margin allocation. If that position deteriorates, the liquidation path is constrained to its assigned collateral under the applicable rules.
This can be useful when a trader wants one speculative position to remain independent from a larger portfolio. It also makes trade level risk easier to reason about because the supporting capital is explicit.
The tradeoff is lower capital efficiency. Unused collateral elsewhere in the account does not automatically rescue the isolated position.
Liquidation calculations differ
For cross margin, Hyperliquid compares account value with the aggregate maintenance requirement of the relevant cross positions. That means another position's profit and loss, transfers, funding, and changing account equity can move the liquidation threshold.
For isolated margin, the calculation focuses on the isolated position and its dedicated margin.
This is why a displayed liquidation price should not be treated as a fixed number in cross margin. The broader account state can move it after the position opens.
Position margin mode is not account mode
Cross and isolated margin operate at the position level. Standard, Unified, and Portfolio Margin account modes define the wider balance architecture.
A trader can therefore misunderstand risk by mixing these two layers. Portfolio Margin, for example, may connect eligible balances across a larger portfolio while individual perpetual positions still have their own margin treatment.
Which mode fits which strategy
Cross margin is useful when positions are intentionally managed together, especially when hedges or offsetting exposures share capital. Isolated margin is useful when the trader wants to contain a trade's failure to a specific allocation.
The correct choice depends on whether shared collateral is part of the strategy or an unwanted dependency.
Continue reading
Read How Liquidations Work on Hyperliquid for the process after maintenance margin is breached and Initial Margin vs Maintenance Margin for the two thresholds that govern opening and keeping positions.