The True Decentralization of Hyperliquid: A Double-Edged Sword of Unintervened Markets

The "ETH Whale Liquidation" event in March 2025 was essentially a form of legitimate economic manipulation. The attacker deposited funds and opened a high-leverage ETH long position (approximately 20x leverage, with a nominal value of up to $271M). After the position became profitable, they gradually withdrew unrealized profits (totaling about $17M), artificially lowering the margin health factor and precisely triggering the liquidation mechanism—not through natural losses, but by deliberately creating a "toxic position."

As a result, Hyperliquid's HLP Vault (liquidity providers) was forced to take over this position worth over $200M, leading to a loss of $4M for the Vault, while the attacker netted $1.8M. This incident exposed the risks of providing liquidity on the platform: the HLP Vault, as the "last buyer," is easily exploited by whales.

After the incident, Hyperliquid completely shifted to a decentralized model, no longer providing internal liquidity and transitioning to pure P2P (peer-to-peer) trading. Profitable parties directly gain from the losses of others, with no platform intervention. While this enhanced decentralization, it also amplified the risk of market manipulation.

For example, the recent $XPL chain liquidation event: attackers (suspected to be multiple collaborating addresses) aggressively longed $XPL with position sizes ranging from $500,000 to $5 million, driving the price up 200% from the low to $1.8 (compared to a maximum of only $0.6176 on Binance contracts).

Due to the absence of market makers, arbitrage bots, and extremely low liquidity on the platform, this led to a cascading liquidation of all short positions, instantly "draining" about $2 million in short funds. The attack was entirely "legal," but highlighted the drawbacks of a no-market-maker model: low liquidity assets are prone to pump-and-dump schemes, making ordinary users easy victims.

In summary, Hyperliquid's decentralization reform has avoided internal intervention but has amplified the space for external manipulation. Users need to be cautious of high leverage and small token risks, and the platform may need to introduce more robust mechanisms (such as sliding leverage or liquidity incentives) in the future to achieve balance.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。