Written by: 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-market) launched on its platform soared by nearly 200% in just 5 minutes, and then quickly fell back, triggering large-scale short liquidations and community disputes.
Event Review: Crazy 5 minutes, the market is like a roller coaster
According to Hyperliquid market data, the price of XPL began to rise rapidly from 5:50 AM Beijing time on August 27, soaring from around $0.6 to a maximum of $1.8, a gain of nearly 200% in a few minutes. However, this carnival did not last long - the price fell back to its original shape within a few minutes after hitting a high, and is currently fluctuating around $0.061.
According to Coinglass data, the amount of short liquidations of XPL/USD on Hyperliquid in the past 4 hours reached $17.67 million.
It is worth noting that at the same time, the price of XPL did not fluctuate significantly in centralized exchanges such as Binance and Bitget, which launched pre-market contracts for XPL. This difference has raised community concerns about price manipulation.
Backstage pusher: Two addresses profited $27.5 million
Further tracking of on-chain data through HypurrScan shows that the address starting with 0xb9c began to deploy two days ago (August 24), initially depositing a total of 10.98 million USDC to Hyperliquid in 6 transactions, and then began to ambush XPL long orders, and deposited another 4.993 million USDC to Hyperliquid again at 5:35 this morning.
Subsequently, the address starting with 0xb9c began to place orders to go long on XPL multiple times from 5:36 on August 27 (most single orders ranged from tens of thousands to hundreds of thousands of dollars), and began to close long positions from 5:53. When XPL fell to around $0.6, the address went long on XPL again. Currently, the XPL contract position of the address starting with 0xb9c on Hyperliquid is worth $8.28 million.
Around 08:10 in the morning, the address starting with 0xb9c "withdrew" nearly 600,000 USDC in two transactions, and there were no further actions afterwards.
According to @ai_9684xtpa analysis, the address directly swept the entire order book and squeezed all short orders (mainly 1x hedging orders), earning $16 million in just one minute.
According to Ember Analysis, the XPL liquidation manipulator on Hyperliquid should have made a profit of up to 27.5 million by first ambushing long positions and then driving up the price to trigger liquidation and automatic closing. Among them, the 0xb9c address raised the price of XPL, causing a series of liquidations, eventually triggering automatic closing between $1.1 and $1.2. The DeBank user named "silentraven" (starting with 0xe417) has ambushed 21.1 million XPL at an average price of $0.56 on Hyperliquid in the past 3 days with $9.5 million. After the liquidation was triggered, the position was automatically closed at an average price of approximately $1.15, resulting in a profit of $12.5 million.
Some community users also pointed the finger at Sun Yuchen. @ai_9684xtpa said, "Rumors about Justin Sun are because the source of funds is constantly being traced. The address had transferred ETH to a Justin Sun associated address five years ago, but there is no direct evidence to prove that this is Justin Sun."
Core issues exposed: Structural risks of DeFi perpetual contracts
This event reveals several key hidden dangers of DeFi perpetual contract platforms:
Single oracle dependency, price manipulation is "easy": 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 marked price. As a pre-released token, XPL relies only on a single price oracle, which makes the price susceptible to manipulation. Whales can quickly increase prices with huge long orders and easily break through the liquidation threshold.
Lack of position concentration control: Whales can "control the market": Most DeFi contract platforms do not set position limits for individual users, allowing whales to influence market prices and liquidation mechanisms through large holdings.
Many users believe that "1x leverage hedging" has extremely low risk and is a stable operation, so they relaxed their vigilance against extreme market conditions. However, in the high volatility of the crypto market, even seemingly "safe" strategies are "vulnerable" to price manipulation and black swan events. The liquidation of a large number of 1x leverage hedging orders is a typical example.
@Cbb0fe said, "In this XPL liquidation event, a 10% hedge 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 suffered a loss of $2.5 million. The user said, "I will never touch this isolated market again."
Inspiration
This "five-minute storm" is not only a typical example of market manipulation, but also exposes the weaknesses of DeFi derivatives protocols in terms of risk control, oracle mechanisms, and position management. If these are not improved, similar problems are likely to occur in other DeFi perpetual contracts or crypto-equity synthetic asset platforms.
For traders, it is necessary to clearly recognize that in the crypto market lacking clear supervision and sound risk control, even seemingly stable hedging strategies can be "zeroed out in an instant" in the face of whale manipulation and extreme volatility. The "tuition fees" of the crypto market are often expensive, and respecting risks and making rational decisions are the key to long-term survival.
