Hyperliquid Faces $4M Hit Following the Unraveling of a $200M Ether Trade

Hyperliquid Suffers $4M Loss After Whale’s $200M Ether Trade Unwinds

A highly leveraged $200 million ether (ETH) trade ended in forced liquidation on Hyperliquid, dealing a $4 million loss to the platform’s Hyperliquid Provider (HLP) vault while the trader behind the position walked away with a $1.8 million profit.

How the Liquidation Played Out

The event was triggered by wallet “0xf3f4”, which opened a 50x leveraged long position on ETH, depositing $4.3 million in USDC as margin to control 113,000 ETH.

The trader then withdrew funds, bringing the margin below the maintenance threshold, leading to an automatic liquidation. This maneuver resulted in a profit of $1.8 million for the trader while the HLP vault suffered a $4 million deficit.

Addressing Exploit Concerns

The abrupt liquidation sparked speculation among Hyperliquid users about a potential exploit. However, Hyperliquid quickly dismissed these claims in an X (formerly Twitter) post, clarifying:

“There was no protocol exploit or hack. This user had unrealized PNL, withdrew, which lowered their margin, and was liquidated. They ended with ~$1.8M in PNL. HLP lost ~$4M over the past 24h. HLP’s all-time PNL remains at ~$60M. As a reminder, HLP is not a risk-free strategy.”

Adjusting Risk Controls and Market Response

To prevent similar situations in the future, Hyperliquid has lowered its leverage limits:

Bitcoin (BTC) max leverage reduced to 40x
Ether (ETH) max leverage reduced to 25x

Despite the loss, Hyperliquid’s HLP vault remains profitable with an all-time gain of $60 million. Meanwhile, the platform’s HYPE token briefly dipped from $14 to under $13 in response to the liquidation but has since recovered during late Asian trading hours.