Original title: (The 'harvest' at 5 AM, who directed the extreme market of Hyperliquid XPL?)
Original author: KarenZ, Foresight News
Starting at 5:50 AM on August 27, a thrilling extreme market occurred on the decentralized derivatives trading platform Hyperliquid: the token XPL (pre-contract) launched on the platform skyrocketed nearly 200% in just 5 minutes, then quickly fell back, triggering large-scale short liquidations and community controversies.
Event review: A crazy 5 minutes, the market like a roller coaster
According to Hyperliquid market data, the price of XPL started to surge rapidly from 5:50 AM Beijing time on August 27, soaring from around $0.6 to a peak of $1.8, with a nearly 200% increase within minutes. However, this frenzy did not last long—the price dropped back to its original level within minutes of hitting the peak, and is currently fluctuating around $0.061.
According to Coinglass data, the short liquidation amount of XPL/USD on Hyperliquid in the last 4 hours reached $17.67 million.
Notably, at the same time, the price of XPL did not show significant fluctuations on centralized exchanges like Binance and Bitget, which launched XPL pre-contracts. This difference raised community doubts about price manipulation.
Backstage drivers: Two addresses profited $27.5 million
Through further tracking on-chain data with HypurrScan, the address starting with 0xb9c began to lay out two days ago (August 24), initially depositing a total of 10.98 million USDC into Hyperliquid through 6 transactions, and then began to ambush long positions in XPL, depositing another 4.993 million USDC into Hyperliquid at 5:35 AM today.
Subsequently, the address starting with 0xb9c began placing multiple buy orders for XPL at 5:36 AM on August 27 (with single transaction amounts mostly between tens of thousands to hundreds of thousands of dollars) and started closing long positions at 5:53 AM. When XPL dropped to around $0.6, the address bought XPL again. Currently, the XPL contract position value of the address starting with 0xb9c on Hyperliquid is $8.28 million.
Around 8:10 AM, the address starting with 0xb9c withdrew nearly 600,000 USDC through two transactions, and there were no further actions after that.
According to @ai_9684xtpa's analysis, this address directly swept the entire order book, squeezing all short positions (mostly 1x hedging orders) and earned $16 million in just one minute.
According to further analysis by Yujin, the XPL liquidation manipulators on Hyperliquid should have ambushed in two wallets to go long, then raised the price to trigger automatic liquidation, thus gaining as much as $27.5 million in profit. Among them, the address 0xb9c raised the XPL price leading to a chain liquidation, ultimately triggering automatic liquidation between $1.1 and $1.2. The DeBank username "silentraven" (starting with 0xe417) address ambushed 21.1 million XPL on Hyperliquid at an average price of $0.56 with $9.5 million in the past 3 days. After the liquidation was triggered, the position was automatically liquidated at an average price of about $1.15, earning $12.5 million.
Some community users have also pointed the finger at Justin Sun. @ai_9684xtpa stated, "The rumors related to Brother Sun are because of the continuous tracing of the source of funds. This address transferred ETH to a Justin Sun associated address five years ago, but there is no direct evidence proving this is Brother Sun."
The core issue revealed: Structural risks of DeFi perpetual contracts
This incident reveals several key hidden dangers of DeFi perpetual contract platforms:
· Single oracle dependency, price manipulation is "easy as pie": The Hyperliquid perpetual contract oracle price does not rely on any external data, and the funding rate is determined based on the moving average of the Hyperp mark price. As a pre-issued token, XPL relies solely on a single price oracle, making it easy to manipulate the price. Whales can quickly raise the price through large long positions and easily break the liquidation threshold.
· Lack of position concentration control: Whales can "manipulate the market": Currently, most DeFi contract platforms do not set position limits for individual users, allowing whales to manipulate market prices and liquidation mechanisms through large positions.
Many users believe that the risk of "1x leverage hedging" is very low and operations are stable, thus relaxing their vigilance against extreme market conditions. However, under the high volatility of the crypto market, even seemingly "safe" strategies can be "devastated" in the face of price manipulation and black swan events. The large number of 1x leverage hedging orders being liquidated is a typical case.
@Cbb0fe stated, "In this XPL liquidation event, a 10% hedging operation was performed on its XPL token assets on the HyperliquidX platform, using 1x leverage to short and providing a large amount of collateral for protection, but ultimately still suffered a loss of $2.5 million. This user stated, 'I will never touch this isolated market again.'"
Insights
This "five-minute storm" is not only a typical case of market manipulation but also exposes the weaknesses of DeFi derivatives protocols in risk control, oracle mechanisms, and position management. If not improved, similar issues are likely to occur in other DeFi perpetual contracts or synthetic asset platforms.
For traders, it is necessary to be clear that in the lack of clear regulation and sound risk control in the crypto market, even seemingly robust hedging strategies can "instantly drop to zero" in the face of whale manipulation and extreme volatility. The "tuition fees" of the crypto market are often expensive; respecting risks and making rational decisions are key to long-term survival.
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