🚨Come and eat the complete melon丨Complete timeline of the Hyperliquid XPL short squeeze event and some thoughts——
This morning's most sensational event, a malicious XPL short squeeze occurred again on @HyperliquidX, causing many 1X hedging accounts to be wiped out;
Whales, through carefully planned operations, raised the price of $XPL from $0.60 to $1.80 in just a few minutes, triggering large-scale forced liquidations, resulting in approximately $25M in liquidation losses, while the operators profited over $46M.
1⃣Preparation Phase (August 24-26): Four addresses collaboratively built positions
Address 0xb9c…6801e accumulated a long position of 31.75 million XPL with 11 million USDT at an average price of $0.56, while addresses 0xe41…858c7, 0x006…2a78f, and 0x894…00779 built long positions in batches around $0.56.
2⃣Core Short Squeeze Phase (August 27)
05:35, massive funds injected, price $0.6——Whale 0xb9c0 deposited 16M USDC into the Hyperliquid margin account.
05:37, large order sweep began, price $0.6——approximately 3M XPL was bought, clearing the entire sell order book, with trading volume exceeding $5M in 2 minutes.
05:39, price surge peak, price $1.8——in just 120 seconds, the price increased by 200%, triggering forced liquidations of all high-leverage shorts, with the largest victim 0xc2cb…edf9 being liquidated for $7M, and the total liquidation amount across the platform for XPL was approximately $25M.
05:45, price fluctuated, $1.5-1.65——automated market makers re-quoted, new shorts entered.
05:50-06:21, whales began to take profits, $1.3-1.4——the main whale started selling about half of their position, realizing a profit of $14M-16M, and the three collaborating whale wallets collectively profited approximately $38M in the first hour.
3⃣What issues does this malicious manipulation event reflect?
I believe it reflects, to some extent, the short-term failure of HY's liquidity governance——
The whale's operation did not involve hacking or exploiting technical vulnerabilities; it essentially achieved "malicious results" through "legitimate trading."
Assets like $XPL, with market depth in the millions, are completely unable to withstand the impact of tens of millions in capital. The result is that as long as the whale is patient and lies in wait, they can instantly dump tens of millions in chips to clear the order book, creating "compliant" violent manipulation.
After the last Jelly incident, Hyperliquid had already introduced OI limits and optimized liquidation logic, but this time it was still circumvented, indicating that patch-style governance is always lagging behind attack methods.
The institutional dilemma facing Perps DEX now:
If completely laissez-faire, whales can dominate the market, and retail risks are infinitely amplified;
If completely underwritten, it deviates from the spirit of decentralization, making it not much different from CEX.
In the short term, more risk control measures may continue to be introduced, such as dynamic thresholds, circuit breakers, emergency pauses, or attempts to depersonalize interventions, handing them over to DAO or transparent governance logic to avoid single-point discretion;
Looking long-term, I believe that future Perps DEX is likely to differentiate into two tiers of markets——
Retail protection layer: with restrictions and limited risk control, ensuring position safety, allowing for peace of mind in trading;
Free competition layer: with almost no limits, allowing large players and institutions to freely compete.
The ultimate form is likely not a completely DeFi utopia, but rather a closer approximation to an on-chain mixed market order. It remains to be seen if any new DEX will come to break this pattern.
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