Hyperliquid Testnet Launches HIP-3 Cross Margin, Multiple DEXs Share Collateral to Prevent Chain Reactions of Liquidation

Hyperliquid announces that its permissionless perpetual contract market HIP-3’s cross-margin feature is now enabled on the testnet. The new mechanism allows perpetual contracts with the same collateral under a unified account to share margin across multiple DEXs, while the “Protected Cross Margin” design isolates risk exposure between different DEXs to prevent cascade liquidations.
(Background: BitMEX launches Hyperliquid copy trading feature, allowing users to follow top traders on PerpDEX with one click)
(Additional context: Perpetual contracts crossing into prediction markets: Hyperliquid’s ambitions and challenges with HIP-4)

On February 13, Hyperliquid officially announced that the cross-margin function for the permissionless HIP-3 perpetual contract market is now live on the testnet, though not yet on the mainnet. However, the feature has met the criteria for the mainnet bug bounty program, indicating Hyperliquid is in the final stages of mainnet deployment.

HIP-3 is a major upgrade launched by Hyperliquid in October 2025, allowing anyone to stake 500,000 HYPE tokens to deploy their own perpetual contract market on the platform. Since launch, HIP-3 has accumulated over 10 billion USD in trading volume.

According to official statements, deployers of HIP-3 must first enable cross-margin for a specific asset before users can trade that asset with cross-margin.

“Protected Cross Margin”

The highlight of this new cross-margin mechanism is its “Protected Cross Margin” design.

Under a unified account, all cross-margin perpetual contracts using the same collateral asset can share margin, even across multiple DEXs. This means users no longer need to deposit separate margins for each DEX, greatly improving capital efficiency.

However, shared margin typically raises concerns about risk spreading—if an asset on one DEX experiences sharp volatility, could it affect other positions? Hyperliquid’s answer is: No.

Assets on different DEXs are protected to maintain their margin levels, preventing automatic deleveraging (ADL) caused by significant price swings on other DEXs.

But whether this truly holds up remains to be seen through actual “experience.”

Not applicable to DEX abstraction interfaces

It is also worth noting that Hyperliquid explicitly states that the cross-margin feature is not designed for DEX abstraction interfaces, and related interfaces should not allow trading with cross-margin via DEX abstraction.

Users wishing to use cross-margin with HIP-3 assets should do so through a Unified Account or Portfolio Margin to achieve the expected cross-margin behavior.