Yesterday opened a short position at $xpl and hit the stop loss. The idea was correct but the position was wrong.
🤔
If you're inexperienced, practice more and try to simply review how the hyperliquid pre-contract works:
🧨
Background
- High APR deposits from plasma attract large investors, with many users opening 1x short positions for hedging on hyperliquid.
- This means that at certain price points, a large number of liquidation points are accumulated.
🧨
Mechanism
- The hyperliquid pre-contract only has a single oracle + internal HL order book, lacking external anchoring.
🧨
Attack
- Manipulators aggressively pull the price up → trigger liquidations → liquidation orders = buy orders → price instantly goes from $0.58 → $1.8.
- The depth on the CEX side is large → only pulled to $0.617.
- Funding rates become ineffective: under normal circumstances, funding rates would make long positions incur high costs, thus suppressing price increases; however, in extremely short-term scenarios, even if the funding rate annualizes to 1200%, it still cannot prevent price imbalance because the buying pressure from liquidations far exceeds the constraints of the funding rate.
For a DEX like Hyperliquid, the main manipulation risks are concentrated in:
- Liquidation mechanisms can be exploited (shorts/longs concentrated → being consecutively harvested)
- Shallow liquidity (large orders can directly change prices)
- Single oracle or reliance on internal matching (no arbitrage externally, can decouple in the short term)
- Extreme funding rates (high rates become a manipulation tool)
- False orders / wash trading (more likely to mislead retail investors)
Practical operation suggestions:
1️⃣
Observe liquidation distribution
Use on-chain tools or exchange data to see where the concentration of positions is.
If there is a large area of short liquidation above, it may be violently swept.
2️⃣
Place “sky-high orders” in advance
If someone places a short at $4 → it’s like preparing for an extreme situation.
Because if it really shoots up to that point, one can gain extremely high odds.
