Bybit CEO Ben Zhou addressed a recent $4 million loss incurred by the decentralized exchange (DEX) Hyperliquid, triggered by a high-leverage trade from an Ether whale. On March 12, the trader utilized about 50x leverage to convert $10 million into a $270 million position but could not exit without significantly impacting the price. The trader withdrew collateral instead, forcing Hyperliquid to absorb the losses. This event led Hyperliquid to revise its leverage limits, reducing Bitcoin leverage to 40x and Ethereum leverage to 25x, thereby increasing maintenance margin requirements for larger trades to cushion against liquidations. Zhou acknowledged that centralized exchanges (CEXs) face similar risks and suggested implementing a dynamic risk mechanism to lower leverage as positions grow. Although this strategy could enhance safety, he noted it might negatively affect business as users often prefer higher leverage. Following this liquidation event, Hyperliquid reported a significant outflow of $166 million on the same day, revealing vulnerabilities in the DEX ecosystem.

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