The most comprehensive analysis of POPCAT's collapse | It's not a plug, it's a precision attack: Hyperliquid was breached, HLP lost $4.9 million! Last night, POPCAT suddenly plummeted, appearing to be another ordinary long position explosion, but from the perspective of on chain behavior, position structure, and liquidation path, it is more like a long planned liquidity system attack. This doesn't seem like the first time, and it may not be the last time either! So you see: our market risk may come from places we can't even imagine, just like last night's diversionary rhetoric. You didn't do anything wrong, but your money may suddenly disappear in just a few seconds! In the highly transparent and controllable environment of sustainable DEX, such events are almost bound to erupt sooner or later. 1、 Event Review: Long Planned Operation! one ️⃣ Prepare funds and address structure in advance: The attacker withdrew 3 million USDC from OKX approximately 13 hours before the incident, and immediately split it into 19 addresses. This kind of splitting behavior usually has two purposes: Avoiding risk control Fuzzy position and upper limit of funds for activating long positions two ️⃣ Continuously building huge long exposures: The attacker continues to long POPCAT on HL, pushing the overall exposure to a scale of 20-30 million US dollars. Under low liquidity targets, this is a magnitude sufficient to leverage the entire market structure. three ️⃣ Creating false demand: $0.21 for a large wall purchase: In order to create the effect of "real buying to drive the market upward", he posted a huge buying wall of about 30 million yuan at the $0.21 level. The purpose of this behavior is very clear: Build false depth, attract retail investors, quantify and trend strategies to collectively enter the long market. The handicap visually displays' strong support ', thereby increasing market trust. four ️⃣ A large number of retail investors and quantitative investors saw the buying wall and mistakenly thought that "someone is building a large-scale position", and began to follow suit and go long. five ️⃣ Sudden Wall Removal → Price Structure Collapse Instantly: The attacker instantly removed the wall without prior notice. On the premise that POPCAT's depth is not particularly deep, the price immediately plummeted freely. six ️⃣ The attacker's own position is self destructively liquidated → all collateral is destroyed: The attacker's long positions were all liquidated in an instant, with 3 million collateral reset to zero - but this was not the result he wanted to avoid, on the contrary, it was part of the attack. seven ️⃣ HLP forced to take on bad debts → loss of $4.9 million: The attacker's exposure is so great that the liquidation slippage far exceeds the acceptable range. The liquidation is no longer digested by the market, but transferred to the platform's liquidity pool (HLP): HLP automatically assumed the exposure, resulting in a loss of approximately $4.9 million. eight ️⃣ After the incident, the platform had to manually intervene in the market and close the remaining risk exposure. nine ️⃣ Later, Hyperliquid temporarily suspended the Arbitrarum bridge (deposits and withdrawals within the exchange are not affected). The overall link is very clear: Simply put, attackers use real capital as bait and pass on real losses to LPs through false deep manipulation and flaws in clearing mechanisms. This is the fundamental reason why perpetual DEX can be attacked. 2、 Why is it said that this doesn't look like an 'ordinary liquidation'? I have looked at several key points: one ️⃣ 19 wallets split funds → Professional preparation two ️⃣ Large scale wall buying to create fake depth → Specially lure more three ️⃣ Instant cancellation triggers chain clearing → Have a deep understanding of the mechanism four ️⃣ Returning the attacker's capital to zero is not the focus → What he bet on is' letting LP lose for me ' five ️⃣ Third market accident on the platform → Consistent logic before and after This is a typical example: using real capital to create false demand → tearing apart clearing mechanisms → arbitrage attacks that allow liquidity pools to eat bad debts. 3、 Deep issue: The structural weaknesses of decentralized sustainability are once again exposed The reason why this incident is serious is not because someone lost millions, nor because HLP suffered 4.9 million bad debts, but because it hit the biggest pain point of all Perp DEX: The universal structural weakness of decentralized sustainability has once again been proven to be exploitable by attackers: low liquidity targets+high leverage+manipulable opening depth=natural attack surface! ① Low liquidity token (Long tail token) POPCAT has limited depth and low cost of manipulation. ② High leverage (20-30x) The cost of attack can be exponentially amplified. ③ The liquidation mechanism depends on the depth of the position (Orderbook or hybrid structure) As long as you manipulate the market position, you can change the liquidation path and make the system bear bad debts. When these three are combined, a natural attack surface is formed. GMX、Drift、MUX、Vela、 Even early versions of dydx have encountered similar issues. In fact, you will discover a cruel but true pattern: Attackers only need tens of thousands to millions of dollars, which is enough to make the protocol lose millions or even more. This is a long-term risk for the entire Perp DEX industry. 4、 Risk Warning and Reflection: This is a necessary path, but the cost is high HL emerges, Aster returns a hundredfold! The outbreak of sustainable DEX this year should be an inevitable event, and its acceptance by everyone is essentially due to its higher transparency, permissionless market making methods, and truly on chain trading logic. But transparency means' verifiable ', verifiable also means' can be rehearsed', and being rehearsed means' can be attacked '. Below are some inspirations that this incident has given me: one ️⃣ Inspiration for Traders: The longer the target, the easier it is to be manipulated; Buying and selling walls on the chain is never trustworthy; The greater the fluctuation, the more attractive it is for manipulators; The risk of sustainable DEX comes not only from prices, but also from the 'system structure itself'. two ️⃣ Inspiration for LP: The benefits of perpetual agreements are never 'given for free', but correspond to bearing the risk of bad debts As long as there is a high leverage scenario, bad debts are inevitable events; HLP, GLP, and vLP are essentially "clearing counterparties"; Once extreme market conditions occur, LP may bear extremely asymmetric losses; three ️⃣ Inspiration for the industry This type of event will not make Perp DEX disappear, but it will force it to: Adjust the selection of targets Refactoring the liquidation mechanism Introduce more anti manipulation measures Update price source mechanism Introduce insurance funds or risk control supplementary pools Limit false depth and large cancellations In a sense, such events are an inevitable stage of industry growth - painful but necessary. So I say, this is also a good thing. Such events will force Perp DEX to rethink systematic risk control. Anyway, it can be considered a necessary path! 5、 Conclusion: Every sharp drop may be precisely exploited and manipulated. We cannot predict risks, but we can predict ourselves! The sharp decline of POPCAT is just a small fluctuation in asset prices; But the attack logic behind it reminds us once again: Decentralized sustainability is not a purely technical game, but a comprehensive battlefield of mechanisms, confrontations, and incentives. The real risk often comes not from the market situation, but from the moment when the system is "precisely utilized". Every sharp drop may be precisely exploited and manipulated, and we cannot predict where these risks lie. All we need to do is to learn more about ourselves, know what we are not good at, and know what we do not know. It is very important. I don't know, so don't go there. I can earn less, but I must not lose everything at once! The principal is always the most important! You need to deeply believe and understand the true meaning of this paragraph! May all participants enhance their cognition in such events, rather than just bearing the cost. The data and images in this article are from @ arkham. We would like to express our gratitude!