Following a substantial loss that hit its HLP vault for $4 million, Hyperliquid adjusted BTC and ETH trading limits for their platform.
A professional online trader known as a whale built an extensively leveraged long position worth 160,234 ETH and maintained a risk factor of 50X. The position for the trader faced termination because the market trend reversed. Before the liquidation was carried out the trader successfully took 17.09 million USDC from the system and made a total profit.
Hyperliquid spread the loss from liquidation across its funds that contained USDC deposits to supply market liquidity and share rewards or impacts among participants. Users of the vault expressed worry about its defenses after it successfully covered the $4 million injury which represented 1% of its $451 million holdings.
Hyperliquid Denies Exploit, Adjusts Leverage Policy
After the incident people started guessing if someone had cheated with the HLP vault system. Based on user feedback, the suspected trader took money out of the platform which then triggered an automatic selling system for the HLP vault to balance the trade.
Hyperliquid handled the matter by posting on social media X to confirm that no exploitation or hacking took place. Our liquidating technology failed to process the trading position without errors.
Hyperliquid takes steps to change its leverage policy after this event happened. Hyperliquid now requires traders to keep 40% of their Bitcoin or 25% of their Ethereum invested to maintain large trading positions.
These changes improve risk management while shielding the HLP vault from potential issues so users can continue their trades at attractive conditions.
