Hyperliquid Suffers $4M Loss Following Major Ether Trade Liquidation

Summary

The liquidation of a substantial long position in Ether has resulted in a $4 million loss for Hyperliquid, a decentralized finance platform, accentuating the volatility in the crypto market.

Details

A whale account opened a long position valued at $200 million in Ether (ETH), leading to a significant $4 million loss for one of Hyperliquid’s vaults.
The user withdrew funds, which led to a profit of $1.8 million for them but incurred a $4 million loss for Hyperliquid’s Hyperliquid Provider (HLP) vault.
In a bid to enhance maintenance requirements, Hyperliquid plans to adjust the maximum leverage for Bitcoin (BTC) and ETH to 40x and 25x respectively.

Impact

The loss resulted from a wallet identified as ‘0xf3f4’ maintaining a 50x leveraged position while depositing $4.3 million in USDC as a margin, with the total size amounting to 113,000 ETH. The incident has sparked speculation among the platform’s users regarding potential vulnerabilities, which Hyperliquid dismissed outright, asserting:

“There was no protocol exploit or hack.”
(Translation: It was not due to any vulnerabilities in the system.)

Despite this setback, Hyperliquid’s HLP vault has a historical profit of approximately $60 million, and the platform’s token has shown resilience, recovering from an initial dip following the liquidation event.