A massive $340 million ETH liquidation led to an 8.5% drop in the HYPE token and left the Hyperliquid platform with a $4 million loss.
What Happened
According to Hyperliquid, the event resulted from a margin withdrawal, reducing the trader's collateral below maintenance levels. The whale used high leverage to build a long position involving 175,000 ETH valued at $340 million. They later withdrew $17.09 million in margin, triggering the liquidation event and causing a cascade of losses.
Response and Consequences
The HLP vault, serving as a liquidity backstop, absorbed the position at $1,915 per ETH, but the liquidation's size led to a $4 million deficit. The platform plans to adjust its risk parameters to prevent similar incidents in the future. Maximum leverage limits for Bitcoin will be updated to 40x from 50x and for Ethereum to 25x from 33x.
Market Impact
The HYPE token was impacted as its price dropped by 8.5% but soon slightly recovered. The current price is still 3.2% lower than its level from 24 hours ago. The token is down 24.3% over the past week, underperforming the broader crypto market.
Despite the loss, the HLP vault still holds an all-time profit of $60 million. Hyperliquid continues to expand its ecosystem by launching HyperEVM to improve network functionality.
