A new research preprint finds that Hyperliquid's backstop absorbed about $576 million of forced sales in the worst minute of the October 2025 crypto crash, keeping most of that selling off the public order book. The study measures the effect only within Hyperliquid and has not completed peer review.
Hyperliquid diverted most of its forced selling away from the public order book during the sharpest minute of the October 2025 crash, according to a new research preprint. That routing may have stopped a feedback loop that pushes prices lower and triggers further liquidations.
$641 million force-sold in one minute
About $641 million was force-sold on Hyperliquid at 21:19 UTC on Oct. 10, the paper found. Of that, roughly $576 million went to the Hyperliquid backstop, while about $64 million reached the order book.
The split matters because a thinning order book can push prices lower and force more leveraged positions to close. The backstop can interrupt that chain by absorbing orders inside the venue instead. Hyperliquid's liquidation rules first try to close a position through market orders; under specified conditions, a liquidator vault tied to the Hyperliquidity Provider protocol vault takes over the position instead.
Backstop absorbed 62.6% of forced-sale value
The study found the backstop absorbed 62.6% of forced-sale value off-book after onset. The event was also highly compressed: 87.8% of forced selling after onset happened within 30 minutes and 96.5% within one hour. Separately, the paper tracked $733 million of book-directed forced-sale value across a 15.7-hour post-onset window, including $644 million during the initial nucleation phase.
To gauge how self-sustaining the cascade was, the authors modeled it with a branching ratio, the average number of additional liquidations tied to each forced sale, where a ratio near 1 would signal a chain reaction inside the venue. Hyperliquid's estimate stayed below 0.2 in every measured regime, reaching 0.195 during nucleation and easing to 0.140 at the peak, while a separate amplification calculation implied a ratio of 0.122.
The authors interpret the backstop as damping feedback inside the venue at the climax, but the finding applies only within Hyperliquid — shared prices across exchanges may still have amplified leveraged liquidations market-wide. The paper is a companion to earlier work that found no single early-warning variable held across seven Bitcoin perpetual futures cascades from 2022 through 2025. Hyperliquid's fill-log archive begins May 25, 2025, making October's crash its only in-flight case study so far, and the authors frame venues without a comparable backstop as the next test case.
Source: CryptoSlate
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