Original Title: "The 'Harvest' at 5 AM: Who is Directing the Extreme Market of Hyperliquid XPL?"
Original Author: KarenZ, Foresight News
At 5:50 AM on August 27, a thrilling extreme market unfolded on the decentralized derivatives trading platform Hyperliquid: the token XPL (pre-market) listed on its platform skyrocketed nearly 200% in just 5 minutes, before quickly retreating, leading to massive short liquidations and community disputes.
Event Review: A Crazy 5 Minutes, Market Like a Roller Coaster
According to Hyperliquid market data, the price of XPL began to surge rapidly from around 0.6 USD at 5:50 AM Beijing time on August 27, soaring to a peak of 1.8 USD, with an increase approaching 200% within minutes. However, this frenzy did not last long—the price fell back shortly after reaching its peak and is currently fluctuating around 0.061 USD.
Data from Coinglass shows that the short liquidation amount for XPL/USD on Hyperliquid in the last 4 hours reached 17.67 million USD.
Notably, at the same time, centralized exchanges like Binance and Bitget, which listed XPL pre-market contracts, did not show significant price fluctuations. This discrepancy raised community suspicions of price manipulation.
Behind the Scenes: Two Addresses Profited 27.5 Million USD
Further tracking on-chain data through HypurrScan shows that an address starting with 0xb9c began positioning itself two days prior (August 24), initially depositing a total of 10.98 million USDC into Hyperliquid through 6 transactions, and then started to accumulate long positions in XPL, depositing another 4.993 million USDC into Hyperliquid at 5:35 AM today.
Subsequently, the address starting with 0xb9c began placing multiple long orders for XPL at 5:36 AM (with individual order sizes mostly ranging from tens of thousands to hundreds of thousands of USD) and started closing long positions at 5:53 AM. When XPL dropped to around 0.6 USD, the 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 USD.
Around 08:10 AM, the address starting with 0xb9c "withdrew" nearly 600,000 USDC through two transactions, with no further actions afterward.
According to analysis by @ai_9684xtpa, this address directly swept the entire order book, squeezing all short positions (mostly 1x hedging positions), earning 16 million USD in just one minute.
Additionally, analysis by Yujin suggests that the XPL liquidation manipulators on Hyperliquid likely positioned themselves long through two wallets, then raised the price to trigger automatic liquidations, thus obtaining profits of up to 27.5 million USD. Among them, the 0xb9c address raised the XPL price, causing a chain liquidation, ultimately triggering automatic liquidations between 1.1-1.2 USD. The DeBank username "silentraven" (starting with 0xe417) had accumulated 21.1 million XPL at an average price of 0.56 USD on Hyperliquid over the past 3 days. After the liquidation was triggered, the position was automatically closed at an average price of about 1.15 USD, yielding a profit of 12.5 million USD.
Some community users have pointed fingers at Sun Yuchen. @ai_9684xtpa stated, "The rumors about Brother Sun are due to the continuous tracing of the source of funds; this address had transferred ETH to a Justin Sun-related address five years ago, but there is no direct evidence proving this is Brother Sun."
Exposed Core Issue: Structural Risks of DeFi Perpetual Contracts
This incident reveals several key hidden dangers of DeFi perpetual contract platforms:
· Dependence on a Single Oracle, Price Manipulation is "Easy": The price of Hyperliquid's perpetual contract oracle does not rely on any external data; the funding rate is determined based on the moving average of Hyperp's marked price. As a pre-issued token, XPL relies solely on a single price oracle, making it susceptible to manipulation. Whales can quickly raise prices through large 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 single users, allowing whales to influence market prices and liquidation mechanisms through large holdings.
Many users believe that "1x leverage hedging" carries very 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 "crushed" in the face of price manipulation and black swan events. The large number of 1x leverage hedging positions being liquidated is a typical case.
@Cbb0fe stated, "In this XPL liquidation event, a 10% hedging operation was performed on its XPL token assets on the HyperliquidX platform, using 1x leverage to short and providing a large amount of collateral for protection, but ultimately still suffered a loss of 2.5 million USD. The user stated, 'I will never touch such isolated markets again.'"
Insights
This "Five-Minute Storm" is not only a typical case of market manipulation but also exposes the weaknesses of DeFi derivatives protocols in risk control, oracle mechanisms, and position management. If improvements are not made, similar issues are likely to arise in other DeFi perpetual contracts or synthetic asset platforms.
For traders, it is essential to recognize that in the crypto market, which lacks clear regulation and comprehensive risk control, even seemingly robust hedging strategies can "instantaneously go to zero" in the face of whale manipulation and extreme volatility. The "tuition" of the crypto market is often expensive; respecting risks and making rational decisions are key to long-term survival.
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