This massive liquidation of XPL on HyperLiquid was not an accident; it mirrors the previous JELLYJELLY incident. It was not a simple market fluctuation, but a blatant 'liquidity hunt' that precisely exploited the weaknesses in the mechanism, human nature, and market structure.

According to on-chain data monitoring, the core process of this incident is as follows:

  • At 05:35 AM: A whale address 0xb9c…6801e suddenly invested a huge amount of USDC into HyperLiquid and opened a long position on XPL tokens with 3x leverage. Its fierce buying momentum instantly cleared the entire order book, causing the XPL price to begin to spike vertically.

  • 05:36 – 05:37: Driven by this whale's powerful push, the XPL price skyrocketed from nearly $0.6 to about $1.80 within approximately 2 minutes, an increase of over 200%. The sharp rise triggered massive liquidations of short positions, with address 0xC2Cb losing about $4.59 million and 0x64a4 losing about $2 million.

  • Quickly locking in profits: At the peak price, this whale quickly closed its position, locking in approximately $16 million in profit within just one minute. Meanwhile, two other coordinating whale addresses also took profits at the high. Ultimately, these three addresses collectively profited nearly $38 million.

After the incident: Notably, after completing the main profit-taking operation, the whale still holds a long position of up to 15.2 million XPL, worth over $10.2 million, indicating that it may wish to continue exerting influence on subsequent market trends.

A total of 4 main addresses participated in the $XPL hedging attack, accruing profits of $46.1 million (Source: @ai_9684xtpa )

Let's take a look at how this targeted attack was executed.

Exploiting liquidity disadvantages: The process is clearly divided, and the methods are seasoned. On-chain data shows that at least 4 whale addresses participated in this attack, taking away $46.1 million.

  1. Exploiting liquidity disadvantages: Why XPL? Because it's a pre-market contract that few people play with, and the liquidity pool is as shallow as a puddle. In this environment, price control almost entirely depends on the amount of capital. The whale used three times leverage to directly sweep the sell orders, taking advantage of this structural asymmetry to leverage the entire market with relatively small costs.

  2. Creating a chain reaction of liquidations: The price surged from $0.6 to $1.8, not because of real money buying it up, but the whales only used startup capital; the real fuel was all the short sellers.

Let me explain this 'death spiral': the whale raises the price with large orders -> your short position is liquidated -> the system forces you to buy back to close -> your buy orders further push up the price -> the liquidation line for the next short arrives... When the snowball reaches its maximum, the whales calmly sell their chips at high positions to these passive buyers, completing the harvest.

  1. Highly coordinated operations: The on-chain flow of funds clearly reveals that this was not a solo operation. At least four addresses coordinated their funding sources, entry rhythms, pump actions, and exit timings like they were from the same training institution.

  2. Exaggerated platform design flaws: HyperLiquid's internal pricing mechanism did not connect to external oracles, meaning that here, the price is entirely dictated by the people within the platform. Whales took advantage of this, running rampant in this shallow pool. Ironically, the JELLYJELLY incident from months ago followed the same formula and had the same flavor.

Review of the JELLYJELLY incident.

This XPL incident is not an isolated case. Just on March 26 of this year, HyperLiquid experienced a similar price manipulation event involving the JELLYJELLY token. At that time, a certain whale address aggressively sold JELLYJELLY, causing the price to plummet and forcing the platform's liquidity pool (HLP) to passively short. Subsequently, that address quickly reversed its position, pushing the price up, which resulted in a loss of nearly $12 million for the HLP treasury. In the aftermath, HyperLiquid had to delist the trading pair and compensate the affected users.

Although the platform updated its leverage and liquidation mechanisms after the JELLYJELLY incident, the occurrence of the XPL event indicates that its system still has significant vulnerabilities when facing attacks initiated by whales exploiting capital and mechanism loopholes.

If you don't want to become the next 'meal on the plate', refer to the following points.

The XPL incident once again verifies a harsh reality: in a market with insufficient liquidity, retail investors are the natural 'counterparty' and 'fuel' for whales. To avoid becoming the next victim of hunting, the following points are crucial:

  • Don't play with sharks in a 'small pond.'
    Do not easily participate in pre-market contracts, new coins, or small-cap leveraged trading.Shallow waters, few fish, easy to catch. If you must participate, you must treat it as high-risk speculation, investing funds that could be wiped out at any time; do not harbor fantasies of 'catching a big trend.'

  • Leverage is the rope that hangs you.
    In this market, there is no difference between 2x leverage and 20x leverage; both can happen in an instant. Always keep your position within a range you can calmly accept losses, such as 5% of your total funds. Surviving is more important than anything else.

  • Be wary of abnormal market orders and capital flows.
    When you see a coin inexplicably taking off vertically, and the sell orders being torn apart like paper, don't FOMO—run! That’s not an opportunity for wealth; that’s the beginning of a slaughter.Capable traders can pay attention to on-chain data (refer to on-chain data platforms like Onchain Lens, Lookonchain, etc.), as large amounts of funds flowing into specific platforms before an attack are common danger signals..

Don't bet in a casino with opaque rules.
Before playing, spend five minutes checking if the platform has oracles and sufficient trading depth. A good platform will find ways to protect you, rather than letting the rules become a weapon for others to attack you. After the incident, HyperLiquid issued an official statement, which consisted of just one sentence: 'This has nothing to do with us, reflect on yourself.'

  • Don't gamble your life savings on a fantasy.
    Whales profit from information asymmetry and loopholes in the rules, while many lose money chasing the fantasy of getting rich quick. Stop pursuing opportunities that don't belong to you; it's far better to focus your energy on risk control.

Remember this: in this jungle, the most dangerous thing is not the rise and fall of prices, but those who hide behind the rules and see you as prey. Don't be the prey.