Decentralized exchange Hyperliquid reported a significant loss of $4 million due to a highly leveraged trade by a user, who utilized 50x leverage on a $285 million bet on Ethereum. The trader, identified by a wallet starting with '0xf3f4', made a profit of $1.8 million before the position was liquidated, which was not due to any exploit. The situation caused the Hyperliquidity Provider (HLP) to hold a toxic position after the liquidation process. Despite accumulating $60 million in profits since May 2023, this incident marked the HLP's worst day on record, erasing gains made since February. Following the liquidation, Hyperliquid's HYPE token saw a drop of up to 10%, eventually recovering to around $13.41. In response to the volatility, Hyperliquid announced new measures to lower maximum leverage and adjust margin requirements to better handle future liquidations. The exchange aims to strengthen its operational framework amid ongoing scrutiny of user behaviors and market dynamics.

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