Crazy How a Trader Makes Money Out of Liquidation

 A whale just turned a liquidation into a $1.8M profit, leaving Hyperliquid’s HLP vault with a $4M hole! 
No hacks, just clever trading mechanics. 
Let's unpack this move. 🧵👇

The Setup: 
Whale deposits $10M USDC, opens a massive $271M ETH long (50x leverage). 
But here's the kicker—rather than closing normally (and facing huge slippage), 
they withdraw collateral, triggering liquidation.

The Genius Move:
 By withdrawing funds, they forced Hyperliquid’s vault (HLP) to absorb the position. 
As ETH price slipped, the vault suffered a ~$4M loss. Meanwhile, the trader walked away with a clean $1.8M.

Hyperliquid Reacts: 
To avoid repeats, they reduced leverage—40x for BTC, 25x for ETH. 
But does reducing leverage solve the deeper issue? High leverage and liquidation mechanics remain a vulnerability.

Your Turn! 
Was this clever trading or an alarming DeFi loophole? Should platforms like @HyperliquidX tighten rules or embrace high-risk strategies? Share your thoughts below! 🕵️‍♂️👇
Follow for more

Your Turn! 
Was this clever trading or an alarming DeFi loophole? Should platforms like @HyperliquidX tighten rules or embrace high-risk strategies? Share your thoughts below! 🕵️‍♂️👇
Follow for more https://x.com/bucketshop69