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🧐 Why Did a Trader’s $300M ETH Long Cause Hyperliquid to Lose $4M?

1️⃣ What did the trader do? Profit or loss?
2️⃣ Why did Hyperliquid lose $4M?
3️⃣ How did the trader make money while Hyperliquid took a hit?
4️⃣ Is Hyperliquid still safe?

Let’s break it down! 🚀

Why Did Hyperliquid Lose $4 Million?
Let’s break it down—ETH price dropped, causing long traders to get liquidated 🔻

Step 1:
A trader closed a 15,000 ETH position, reducing their collateral. This pushed their liquidation price up to $1,839/ETH.

Step 2:
When ETH hit the liquidation price, Hyperliquid’s liquidity wasn’t enough to absorb the massive liquidation.

Step 3:
To keep the platform running, the HLP Vault had to step in, buying 160,234 ETH at $1,839/ETH (~$286M) to stabilize the system.

Step 4:
As ETH dropped further to $1,814/ETH due to liquidation-driven sell pressure, the fund took a loss of $25 per ETH.

Final Loss Calculation:
160,234 ETH × $25/ETH = $4 million 💸—a loss distributed among HLP Vault participants.

How Did a Trader Profit While Hyperliquid Lost $4 Million?
The real drama here? Rumors say this trader didn’t just walk away with $1.86 million—they might have made even more by exploiting a vulnerability in Hyperliquid.

📌 Here’s how they pulled it off:

(1) Long on Hyperliquid:

Bought 175,000 ETH at $1,884.4/ETH
Sold 15,000 ETH at $1,930/ETH
Withdrew $17.09M USDC, locking in $1.86M profit
(2) Liquidation Play:

160,234 ETH got liquidated at $1,839/ETH
Price dropped further to $1,814/ETH
HLP Vault took a $4M loss
(3) External Short:

Shorted 100,000 ETH at $1,839/ETH
Closed at $1,814/ETH
$2.5M profit
Final Profit Breakdown:
Long: $1.86M
Short: $2.5M
Total: $4.36M
Meanwhile, HLP Vault’s $4M loss became the “bridge” that helped the trader maximize profits—it reflects the sell pressure they capitalized on.

4/ Is Hyperliquid Still Safe?
🧠 It's unclear whether the trader intentionally attacked Hyperliquid. If they did, they must have had a deep understanding of the system, because pulling it off required:

System knowledge: The trader needed to know that the HLP Vault would take over large positions and wouldn't be able to exit immediately without taking a loss if the price dropped.
Perfect timing: They had to withdraw margin and short ETH at just the right moment to trigger liquidations and profit from price movements.
Market liquidity: The liquidation had to be large enough to impact market prices, creating an opportunity for the short position.
After this incident, Hyperliquid reduced the max leverage for ETH from 50x to 25x to prevent similar situations.

⚖️ In comparison to HLP’s total value of $451M:

The $4M loss is about 1% of TVL, which isn't a huge amount.
Compared to $60M in total profits so far, the loss represents around 6.6%, which is significant but not devastating.
Overall, this wasn’t a smart contract hack, so there’s no need to panic. It’s a risk that most projects using this model will face at some point—even GMX has been hit before.

How Did the Trader Perform? Profit or Loss?
On March 12, 2025, an anonymous trader (wallet "0xf3f4") opened a long ETH position worth over $300 million on Hyperliquid.

What’s interesting is that the trader only used $15.23 million USDC as capital, meaning they were leveraging between 13.5x and 19.2x—an extremely high-risk move.

👀 If you don’t trade Futures, you might not fully grasp the risk level here, but in this market, running a 3x on leverage can already get you liquidated in no time.

At one point, as ETH pumped, this trader was sitting on a potential $8 million profit. However, when ETH dropped to $1,839, their position got liquidated.

🤑 Luckily, before that happened, they had already closed 15,000 ETH and withdrawn $17.09 million USDC, securing a realized profit of $1.86 million.

But the real question is: Why did Hyperliquid take a $4 million loss? 🤔