Large POPCAT Trades Result in $5 Million Loss for Hyperliquid Vault
Hyperliquid, a decentralized perpetuals exchange, suffered a $5 million loss due to an exploit involving the POPCAT memecoin. An attacker built up a $30 million long position and allowed liquidation, leading to HLP holding $25 million worth of POPCAT. The exploit caused a $4.9 million loss for the HLP vault, reducing its monthly return to -1%. In response, Hyperliquid temporarily halted platform deposits and withdrawals and triggered Arbitrum Bridge’s automatic lock mechanism, which was resolved within ~25 minutes. No blockchain downtime occurred, and funds were declared safe. The HYPE token briefly fell but later rebounded to $38.8.
Layer-2
Ethereum Layer-2
Attack on Hyperliquid: A $5 Million Loss
Hyperliquid, the leading decentralized perpetuals exchange by open interest, suffered an attack this morning, causing a $5 million loss to the platform's HLP vault. The attacker built up a $20 million long position in the POPCAT memecoin. As the position grew to approximately $30 million, the attacker allowed it to be liquidated, incurring a $3 million loss while leaving HLP holding more than $25 million worth of POPCAT.
Comparison to Previous Exploits
The attack bore similarities to the JELLYJELLY exploit reported in March. This manipulation led to a massive selloff, leaving HLP with a significant $4.9 million loss and pulling its monthly return to -1%. These circumstances have raised concerns over the platform's vulnerability to such exploit strategies.
Immediate Response from Hyperliquid
In response to the incident, Hyperliquid halted deposits and withdrawals to its HLP vault as they worked to manually close the position. Shortly afterward, the Arbitrum Bridge’s automatic lock feature was triggered, resulting in the temporary suspension of all deposits and withdrawals on the Hyperliquid platform itself.
Statement from Hyperliquid Developer
Hyperliquid developer Iliensinc addressed the issue in the platform's Discord community. They clarified: “The Arbitrum bridge's automatic locking was triggered by a conservative set of conditions, and the bridge was unlocked after the situation was thoroughly investigated within ~25 minutes. Funds are safe. The Hyperliquid blockchain itself was not impacted and experienced no downtime.”
Market Impact of the Attack
During and shortly after the attack, HYPE (the native token of Hyperliquid) briefly fell below $38. However, at the time of writing, it has rebounded to $38.8, showcasing a measure of recovery in investor confidence despite the exploit.