Trader Burns $3M, Triggers $5M Loss in Hyperliquid Vault
An unknown trader executed a coordinated market manipulation on Hyperliquid’s automated Hyperliquidity Provider (HLP) vault, burning $3 million in USDC to trigger cascading liquidations. The attacker withdrew $3 million from OKX, split the funds across 19 wallets, and opened over $26 million in leveraged long positions on the POPCAT-denominated HYPE perpetual contract. A fabricated $20 million buy wall at $0.21 pushed the price higher before being canceled, collapsing liquidity and forcing dozens of high-leverage positions into liquidation. Hyperliquid’s HLP vault absorbed approximately $4.9 million in losses—its largest single-event hit—while the attacker’s own capital was wiped out, suggesting the motive was structural disruption rather than profit. The platform paused withdrawals via an emergency vote lock and resumed operations within an hour. This incident highlights vulnerabilities in automated liquidity mechanisms and underscores the need for robust risk controls in DeFi perpetual markets.
Bearish
Forced liquidations from the $20 million buy wall and the resulting $4.9 million loss in the HLP vault are likely to heighten risk aversion among traders, leading to reduced leverage and selling pressure in the short term. This incident undermines confidence in Hyperliquid’s automated liquidity buffers and could depress demand for its HYPE perpetual contract. Over the longer term, enhanced risk controls and system upgrades may restore trust, but the immediate market reaction is expected to be negative, making the overall impact bearish.