Hyperliquid XPL Extreme Market: 200% Surge in 5 Minutes Followed by a Flash Crash, $17.67 Million in Short Positions Liquidated, Two Addresses Made $27.5 Million.
Written by: KarenZ, Foresight News
At 5:50 AM on August 27, the decentralized derivatives trading platform Hyperliquid witnessed a thrilling extreme market event: the token XPL listed on its platform surged nearly 200% in just 5 minutes, followed by a rapid decline, triggering large-scale short liquidations and community disputes.
Event recap: A crazy 5 minutes, the market like a rollercoaster
According to Hyperliquid market data, the price of XPL began to surge rapidly from 5:50 AM Beijing time on August 27, skyrocketing from around $0.6 to a peak of $1.8, with a nearly 200% increase in just a few minutes. However, this frenzy did not last long—the price fell back shortly after hitting the peak and is currently fluctuating around $0.061.
According to Coinglass data, the short liquidation amount for XPL/USD on Hyperliquid reached $17.67 million in the last 4 hours.
Notably, at the same time, on centralized exchanges like Binance and Bitget, where XPL pre-contracts were listed, there was no significant price fluctuation. This discrepancy has raised community suspicions of price manipulation.
Behind the scenes: Two addresses profited $27.5 million
Through further tracking of on-chain data via HypurrScan, it was found that the address starting with 0xb9c began laying the groundwork two days prior (on August 24), initially depositing a total of 10.98 million USDC into Hyperliquid through 6 transactions, followed by ambushing long positions in XPL. At 5:35 AM today, it deposited another 4.993 million USDC into Hyperliquid.
Subsequently, the address starting with 0xb9c began placing multiple long orders for XPL at 5:36 AM on August 27 (with individual order sizes mostly ranging from tens of thousands to hundreds of thousands of dollars) and started closing long positions at 5:53 AM. When XPL fell to around $0.6, that address again took a long position in XPL. Currently, the XPL contract position value of the address starting with 0xb9c on Hyperliquid is $8.28 million.
Around 08:10 AM, an address starting with 0xb9c 'withdrew' nearly 600,000 USDC through two transactions, and then took no further action.
According to analysis by @ai_9684xtpa, this address directly swept the entire order book, squeezing all short positions (mostly 1x hedge positions) and made $16 million in just one minute.
Additionally, according to analysis by Yujin, the XPL liquidation manipulators on Hyperliquid should have ambushed long positions through two wallets before triggering automatic liquidation to gain up to $27.5 million in profit. Among them, the 0xb9c address caused a price surge in XPL, leading to a chain of liquidations, ultimately triggering automatic liquidation between $1.1 and $1.2. The DeBank username 'silentraven' (starting with 0xe417) had ambushed long positions of 21.1 million XPL on Hyperliquid for $9.5 million at an average price of $0.56 over the past 3 days. After the liquidation was triggered, the position was automatically liquidated at an average price of about $1.15, gaining a profit of $12.5 million.
Some community users pointed fingers at Justin Sun. @ai_9684xtpa stated, 'The rumor about Sun Ge is because of the ongoing tracing of fund sources; this address had transferred ETH to an address linked to Justin Sun five years ago, but there is no direct evidence proving it's him.'
The core issue exposed: Structural risk of DeFi perpetual contracts
This incident revealed several key hidden dangers of DeFi perpetual contract platforms:
Dependence on a single oracle makes price manipulation 'easy as pie': Hyperliquid's perpetual contract oracle does not rely on any external data, and the funding rate is determined by the moving average of Hyperp's marked price. As a pre-issued token, XPL relies solely on a single price oracle, making it vulnerable to manipulation. Whales can quickly drive prices up with large long positions, easily breaking through liquidation thresholds.
Lack of position concentration control: Whales can 'manipulate the market': Currently, most DeFi contract platforms do not set position limits for single users, allowing whales to influence market prices and liquidation mechanisms with large holdings.
Many users believe that '1x leverage hedging' carries extremely low risk and is a stable operation, leading them to relax their vigilance against extreme market conditions. However, under the high volatility of the crypto market, even seemingly 'safe' strategies can be 'easily crushed' in the face of price manipulation and black swan events. The mass liquidation of 1x leverage hedge positions this time is a typical example.
@Cbb0fe stated, 'In this XPL liquidation event, I performed a 10% hedge operation on my XPL token assets on the HyperliquidX platform, using 1x leverage to short and providing a large amount of collateral for protection, but ultimately still faced a loss of $2.5 million. The user stated, 'I will never touch this isolated market again.'
Insight
This 'five-minute storm' is not only a typical case of market manipulation but also exposes weak links in DeFi derivatives protocols regarding risk control, oracle mechanisms, and position management. If improvements are not made, similar issues are likely to arise in other DeFi perpetual contract or synthetic asset platforms.
For traders, it is crucial to recognize that in the crypto market, which lacks clear regulation and robust risk control, even seemingly sound hedging strategies can 'instantaneously go to zero' in the face of whale manipulation and extreme volatility. The 'tuition' of the crypto market is often expensive; respecting risk and making rational decisions are key to long-term survival.
