A highly leveraged bet on Ether (ETH) unraveled on the hybrid exchange Hyperliquid, resulting in a $200 million liquidation and a $4 million loss for the platform’s Hyperliquid Provider (HLP) vault.
A single user, identified by the initials of their wallet ‘0xf3f4’, leveraged a 50x long position on the second-largest cryptocurrency by market capitalization on the platform with around $4.3 million to create a leveraged position of 113,000 ETH.
The wallet then started strategically withdrawing funds, eroding the margin supporting their massive position to the point that it exceeded minimum requirements. The move led to $1.8 million in profit for the user, while HLP – a vault designed to pool user deposits for liquidity on the exchange – lost $4 million.
The outcome of the trade fueled speculation among Hyperliquid users, with some initially suspecting a potential exploit of the platform’s underlying technology. The exchange addressed users’ concerns, stating that the HLP vault is “not a risk free strategy” and that the incident wasn’t an exploit or a hack.
The platform further emphasized that despite the significant single-day loss, the HLP vault remains profitable overall, boasting an all-time profit of approximately $60 million.
Regarding commentary and questions on the 0xf3f4 user's ETH long:
To be clear: 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…
— Hyperliquid (@HyperliquidX) March 12, 2025
Hyperliquid Lowers Maximum Leverage
In the wake of the event, Hyperliquid announced that to mitigate a similar occurrence in the future, it was reducing the maximum leverage allowed on both BTC and ETH futures contracts to 40x and 25x, respectively.
The adjustment will increase the maintenance margin for prominent positions, providing a more significant buffer against rapid margin erosion and potential liquidations.
Hyperliquid’s HYPE token has plunged by more than 5% over the incident to now stand at little over $13, down from over $14.5 earlier in the day. The cryptocurrency has lost around 44.5% of its value over 30 days amid a broader crypto market downturn.
Disclaimer
This article is provided for information only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
