The liquidation of a long ether (ETH) position exceeding $200 million resulted in a $4 million loss for Hyperliquid, where the “whale” executed this trade.
The liquidation involved wallet ‘0xf3f4’ opening a highly leveraged 50x long ETH position, depositing $4.3 million in USDC as margin, which amounted to 113,000 ETH in total.
As the wallet began withdrawing funds, the margin fell below the necessary maintenance levels, leading to a $1.8 million profit for the user but a $4 million loss for the Hyperliquid Provider (HLP) vault.
Vaults represent a blockchain-based offering on Hyperliquid where users can deposit USDC and possibly receive a portion of profits generated by trading activities of other users or the vault’s manager.
This situation sparked speculation among Hyperliquid users regarding a potential platform exploit, a rumor the company addressed in a post on X.
“There was no exploit or hack of the protocol,” the company clarified. “This user possessed unrealized PNL, withdrew, which lowered their margin, and was subsequently liquidated. They concluded with approximately $1.8 million in PNL. HLP incurred around $4 million in losses over the previous 24 hours. HLP’s total historical PNL remains approximately $60 million. It’s important to note that HLP is not a risk-free strategy.”
To mitigate similar occurrences in the future, Hyperliquid announced it will adjust the maximum leverage for bitcoin (BTC) and ETH to 40x and 25x, respectively, increasing maintenance margin requirements for larger trades.
Data indicates that Hyperliquid’s HLP vault still boasts an all-time profit of $60 million. In the aftermath of the liquidation, the platform’s HYPE token fell from $14 to below $13 but has since fully rebounded by late Asian hours.