Hyperliquid Exits a $200M Leveraged Ethereum Trade with a $1.8M Profit, HLP Absorbs $4M Loss

A Hyperliquid trader using wallet “0xf3f4” deposited $4.3 million in USDC to open a 50x leveraged long position on ethereum, amassing 113000 ETH valued at over $200 million. After ethereum’s price rose, the trader withdrew funds, reducing their margin below required levels and triggering liquidation. Despite the forced closure, the trader still retained a $1.8 million profit—an atypical outcome for liquidations—while Hyperliquid’s liquidity pool (HLP) absorbed a $4 million loss.

A trader on decentralized exchange Hyperliquid has exited a $200 million leveraged ethereum trade with a $1.8 million profit, while the platform’s liquidity pool absorbed a $4 million loss, prompting leverage adjustments to mitigate future risks.

The trader, using wallet “0xf3f4,” deposited $4.3 million in USDC to open a 50x leveraged long position on ethereum at an average price of $1,770 on Monday. The position size grew to 113,000 ETH, now worth over $200 million.

As ethereum’s price rose, the trader withdrew funds, reducing their margin below required levels and triggering liquidation. Despite the forced closure, the trader still retained a $1.8 million profit—an atypical outcome for liquidations, while Hyperliquid’s HLP took a $4 million loss.

HLP is a community-owned vault that covers deficits in members’ positions. It bought the trader’s position at a favorable mark price but sold it at a lower market rate, incurring the loss. Hyperliquid confirmed that HLP’s all-time profit remains at $60 million.

“There was no protocol exploit or hack. This user had unrealized PNL, withdrew, which lowered their margin, and was liquidated. They ended with ~$1.8M in PNL. HLP lost ~$4M over the past 24h,” Hyperliquid said in a statement on Tuesday.

The platform is also capping bitcoin leverage at 40x and ethereum at 25x to create larger position sizes and better handle large liquidations.

The event sparked discussion on risks in DeFi, especially with high-leverage trading. HYPE briefly fell from $14 to the lower $13 range before recovering.

Centralized exchanges typically absorb such deficits from internal reserves, while Hyperliquid’s model relies on community-backed HLP to share losses.

Hyperliquid’s adjustments aim to prevent similar incidents while balancing user flexibility in choosing leverage with the need to stabilize the system.

The event adds to the evolving challenges faced by DeFi protocols, especially with decentralized risk-sharing models being tested by high-stakes trades.