Hyperliquid News Today: DeFi Faces Liquidity Challenges: $3 Million Exploit Reveals Underlying Vulnerabilities
- Hyperliquid paused deposits/withdrawals after a suspected POPCAT memecoin price manipulation attack caused $4.95M in losses for its community liquidity pool. - A trader used 19 wallets with $3M in USDC to create $25.5M in leveraged long positions, triggering rapid liquidations when prices collapsed. - This follows a March incident involving JELLYJELLY memecoin, highlighting systemic risks in DeFi platforms managing leveraged trades and low-liquidity assets. - The attack exposed vulnerabilities in onchain
Hyperliquid, a prominent decentralized exchange for perpetual contracts, paused both deposits and withdrawals on Wednesday after a suspected case of price manipulation involving the
Data from blockchain analytics provider
An onchain observer known as MLMabc pointed out that the trader seemed to deliberately disrupt the exchange by placing $20 million in buy orders at $0.21 per POPCAT token around 14:45 CET. The total long exposure climbed to $30 million before the price drop set off a chain reaction of liquidations. Hyperliquid’s bridge was taken offline for more than 20 minutes shortly after, likely as a measure to stabilize the platform and prevent additional losses, as per
This isn’t the first time Hyperliquid has encountered manipulation. Back in March, a comparable attack involving the Solana-based memecoin JELLYJELLY led to $12 million in unrealized losses for the HLP. Experts note that such incidents highlight the difficulties decentralized exchanges face in handling extreme market volatility, especially with leveraged trades and concentrated positions, according to
This latest event has also sparked debate about the broader dangers present in decentralized finance (DeFi). Although Hyperliquid’s team stresses the importance of community-driven risk controls and onchain openness, the situation demonstrates how challenging it is to manage large leveraged trades in fast-moving price environments. At the time of writing, POPCAT had dropped over 30% from its earlier highs this week, and Hyperliquid’s own token, HYPE, was down almost 2%.
Hyperliquid has not provided a timeline for when deposits and withdrawals will be restored, leaving both users and liquidity providers uncertain. This incident is a stark illustration of the vulnerabilities in leveraged trading systems, where swift price changes and coordinated maneuvers can rapidly escalate systemic threats.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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