- A whale liquidation caused a $4M loss for Hyperliquid’s HLP vault, impacting HYPE’s price.
- Hyperliquid confirms no exploit, but adjusts leverage to prevent future large losses.
- HYPE dropped 8.5% after a trader’s margin fell, triggering a $4M vault loss on Hyperliquid.
The HYPE token from Hyperliquid recorded an 8.5% price decline on Wednesday due to a significant whale trader liquidation occurrence. The failure of the Hyperliquid Provider (HLP) vault resulted in a $4 million loss, constituting a crucial component of the decentralized perpetual futures exchange. The community raised concerns about manipulation, but Hyperliquid officials verified that no hacking attack or exploit had happened.
The HYPE token experienced an 8.5% decrease in value throughout Wednesday morning trading hours, sending its price from $14.04 to $12.84. Ether position liquidation by wallet ‘0xf3f4’ caused an immediate market downturn as the investor held substantial funds. The investor placed a 50x long bet with USDC worth $4.3 million to purchase 113,000 ETH.
Details of the Liquidation and Market Impact
The whale initiated a fund withdrawal that caused the maintenance margin to drop below requirements thus triggering the automatic liquidation of the account. The investor obtained $1.8 million in profit even though the market experienced a significant decline. The vault experienced a total loss of about $4 million even though it maintained a $451 million value locked resulting in a 1% loss from the original $451 million.
Blockchain analytics firm Lookonchain conducted transaction analysis showing that the whale initially added 15.23 million USDC to develop its leveraged position, which reached a maximum value of $306.85 million ether. During the liquidation process, the whale acquired 17.09 million USDC.

Hyperliquid’s Response and Future Precautions
Following these events Hyperliquid acknowledged the incident occurred without any security breach or exploits. The automated liquidation system from the protocol failed to operate correctly against such large trading positions resulting in substantial financial damages. Hyperliquid adjusted maximum leverage parameters for Bitcoin and Ether positions by limiting them to 40x and 25x, respectively to minimize future similar occurrences. The modified maintenance margin parameters for bigger positions will create a stronger safety mechanism against market fluctuations.

According to the platform, the Hyperliquid Provider vault carries investment risks because profits and losses are shared between participants. The most recent loss has not affected the overall all-time profit of the HLP vault which currently stands at $60 million. The HYPE price revealed stabilization signs after the event by maintaining stability during late Asian trading sessions.
Some users from the community started discussing these events as they debated potential manipulation. The company has strengthened its operations by supporting transparent measures to secure investor interests.