Author: KarenZ, Foresight News
At 5:50 AM on August 27th, a thrilling extreme market condition unfolded on the decentralized derivatives trading platform Hyperliquid: The token XPL (pre-market) surged nearly 200% in just five minutes and then quickly fell back, triggering massive short liquidations and community controversy.
Event review: Crazy 5 minutes, market like a roller coaster
According to Hyperliquid market data, the price of XPL began to rapidly surge from around 5:50 AM Beijing time on August 27th, skyrocketing from approximately 0.6 dollars to a peak of 1.8 dollars, nearly a 200% increase within minutes. However, this frenzy did not last long—within minutes of reaching the peak, the price fell back to its original form and is currently fluctuating around 0.061 dollars.
According to Coinglass data, the short liquidation amount of XPL/USD in Hyperliquid reached 17.67 million dollars within the last four hours.
It is worth noting that at the same time, on centralized exchanges like Binance and Bitget, which launched XPL pre-market contracts, the price of XPL did not show significant fluctuations. This discrepancy raised community suspicions of price manipulation.
Behind the scenes: Two addresses profited 27.5 million dollars
Further tracking on-chain data through HypurrScan shows that the address starting with 0xb9c began laying out two days earlier (August 24th), initially depositing a total of 10.98 million USDC into Hyperliquid through six transactions, and then began to ambush long positions on XPL, depositing another 4.993 million USDC into Hyperliquid at 5:35 AM today.
Subsequently, the address starting with 0xb9c began to place multiple long orders for XPL at 5:36 AM on August 27th (with single order sizes mostly between tens of thousands to hundreds of thousands of dollars) and began to close long positions at 5:53. When XPL dropped to around 0.6 dollars, this address went long on XPL again. Currently, the XPL contract position of the address starting with 0xb9c on Hyperliquid is valued at 8.28 million dollars.
Around 08:10 AM, an address starting with 0xb9c 'withdrew' nearly 600,000 USDC through two transactions, after which there were no further actions.
According to @ai_9684xtpa's analysis, this address directly emptied the entire order book, squeezing out all short positions (mostly 1x hedge positions), earning 16 million dollars in just one minute.
Additionally, according to Yujin's analysis, the XPL liquidation manipulator on Hyperliquid likely ambushed and went long with two wallets before driving the price up to trigger automatic liquidations, resulting in a profit of up to 27.5 million. Among them, the 0xb9c address drove up the XPL price, causing a chain liquidation that ultimately triggered automatic liquidation between 1.1 and 1.2 dollars. A DeBank user named 'silentraven' (starting with 0xe417) had ambushed and gone long 21.1 million XPL at an average price of 0.56 dollars over the past three days. After the liquidation was triggered, the position was automatically closed at an average price of about 1.15 dollars, realizing a profit of 12.5 million.
Some community users have also pointed fingers at Justin Sun. @ai_9684xtpa stated, 'The rumors related to Sun are due to the constant tracing of fund sources; this address transferred ETH to Justin Sun's associated address five years ago, but there is no direct evidence proving this is Sun.'
Exposed core issue: Structural risks of DeFi perpetual contracts
This incident reveals several key hidden dangers of DeFi perpetual contract platforms:
Single oracle dependency makes price manipulation 'easy as pie': The price of Hyperliquid perpetual contract oracle does not rely on any external data, and the funding rate is determined based on the moving average of Hyperp's marked price. XPL, as a pre-issued token, relies solely on a single price oracle, making it vulnerable to manipulation. Whales can quickly pump the price through massive 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 individual users, allowing whales to influence market prices and liquidation mechanisms with large positions.
Many users believe that '1x leverage hedging' has extremely low risk and is a stable operation, thus relaxing their vigilance against extreme market conditions. However, in the highly volatile crypto market, even seemingly 'safe' strategies can be 'vulnerable' in the face of price manipulation and black swan events. The large number of 1x leverage hedge positions being liquidated is a typical case.
@Cbb0fe stated, 'In this XPL liquidation event, I conducted a 10% hedge operation on my XPL token assets on the HyperliquidX platform, using 1x leverage to short and provided a large amount of collateral for protection, but ultimately still suffered a loss of 2.5 million dollars. 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 in risk control, oracle mechanisms, and position management of DeFi derivative protocols. If improvements are not made, similar issues are likely to arise in other DeFi perpetual contracts or synthetic asset platforms.
Traders need to be fully aware that in a cryptocurrency market lacking clear regulation and robust risk control, even seemingly solid hedging strategies can 'instantaneously go to zero' in the face of whale manipulation and extreme volatility. The 'tuition' in the crypto market is often expensive; respecting risk and making rational decisions are key to long-term survival.
