Hyperliquid Suffers $4.9M Loss in POPCAT Liquidity Attack
Hyperliquid, a decentralized perpetual futures exchange on Arbitrum, halted deposits and withdrawals after sustaining a malicious liquidity attack on the POPCAT meme coin. On November 13 at around 00:22 UTC, Hyperliquid paused its Arbitrum bridge for maintenance following an exploit by a trader who withdrew $3 million USDC from OKX across 19 wallets and opened $20 million in POPCAT long positions at about $0.21. When the buy walls were removed, those positions were liquidated within seconds, forcing Hyperliquid’s liquidity engine (HLP) to absorb approximately $4.9 million in losses. Analyst MLMabc believes the operation was deliberate. This echoes a March incident where a JELLYJELLY squeeze cost Hyperliquid $12 million. The event highlights the risks of large-scale memecoin orders on liquidity pools and may prompt Hyperliquid to tighten risk controls.
Bearish
This malicious POPCAT liquidity attack underscores vulnerabilities in decentralized perpetual futures exchanges. Hyperliquid’s forced absorption of $4.9M in losses will likely erode trader confidence and raise concerns about liquidity risk management. Similar to the March JELLYJELLY squeeze that cost Hyperliquid $12M, such events tend to trigger short-term sell-offs of related tokens and reduce leverage usage across platforms. In the short term, traders may shift positions away from meme coins and smaller DEXs, exerting downward pressure on questionable assets. In the long term, the incident could drive demand for improved risk controls and more robust liquidity protocols, but remain a cautionary signal for decentralized exchanges handling large memecoin flows.