Qwatio, a leveraged trader on the Hyperliquid platform, quickly amassed millions of dollars thanks to his successful bets and a method to avoid losses. After three months, he lost $10 million in three days of liquidation.
This incident is smaller in scale than other famous leveraged trading stories, but it carries valuable lessons. Hyperliquid plugged its risk management gaps, and whale hunters organized their efforts to shut him down.
Qwatio's Wild Journey on Hyperliquid
The story of James Wynn captivated the cryptocurrency community, as one man's leveraged trading on Hyperliquid led to losses of $100 million, potentially shaking the entire market. Today, LookOnChain highlighted Qwatio, another trader on Hyperliquid who bet large amounts and saw a sharp decline in his millions of dollars in profits.
Essentially, Qwatio made a series of risky bets on Hyperliquid, leading the community to speculate that he was an insider. A day before President Trump's announcement about the strategic reserve for cryptocurrencies, he took a bold step.
Specifically, Qwatio made long-term trades on Bitcoin and Ethereum with 50x leverage, earning him $6.8 million in a single day. He then took similar bold steps. However, this massive leverage is not everything.
Excessive leverage trading on the Hyperliquid platform can lead to significant losses, but Qwatio found a way to reduce his exposure. After withdrawing his profits of $6.8 million, he liquidated $305 million worth of ETH positions. This might seem like a waste of money, but it actually eliminated his most dangerous positions.
After this liquidation, the excessive liquidity provider (HLP) had to absorb the loss. This pattern was evident in many of these transactions, allowing it to earn millions. LookOnChain even speculates that this tactic inspired the pressure on JELLYJELLY, which turned into a significant crisis for the platform.
In response, HLP significantly reduced its leverage limits after this incident. It appears that this marked the peak of Qwatio's journey in Hyperliquid trading.
Things can collapse in trading.
Since that prosperous moment in March, Qwatio's fortunes have deteriorated. Teams of "whale hunters" formed to take him down, manipulating the prices of assets that were heavily indebted. Despite his initial failures, Qwatio was forced to deposit millions of dollars to prevent the liquidation of his positions in the Hyperliquid market.
It turned out to be the beginning of the end. A few months later, Qwatio's continued investments in Hyperliquid yielded only negative returns. In the past three days, his positions were liquidated six times.
This resulted in $10 million in losses, prompting him to change his name to "falllling." Nevertheless, he continues to try, having deposited $4.5 million in a Bitcoin/Ethereum bet earlier today. So, what lesson can ambitious Hyperliquid traders learn from Qwatio?
In short, while excessive leverage trading seems risky at first glance, it can be more dangerous than imagined. When HLP incurred losses, the entire platform's rules changed. Furthermore, whale hunters attempted to specifically target Qwatio, considering it a vulnerable target.
There is no "infinite financial glitch" in real life. No matter how clever someone is at beating the market, there are ways to retaliate. Any retail trader can attempt to mimic Qwatio's behavior on Hyperliquid, but one mistake could destroy everything.