The Hyperliquid platform has established itself as a key player in the decentralized exchange (DEX) sector. This status has placed it under close scrutiny, particularly since the manipulation of its pre-market XPL token. New safeguards are to be put in place.
Hyperliquid victim of manipulation of its XPL pre-market
Since the highly popular launch of its HYPE token, the decentralized platform Hyperliquid has been at the forefront of the DEX sector. This position has been greatly reinforced by its constantly rising volumes on the perpetual contracts market, with significant leverage (up to x50).
This success has led to a few glitches in recent weeks, such as the alert about a possible hack at the end of July, which turned out to be nothing more than a new “traffic spike.” This gave its developers the opportunity to promise improvements to overcome this type of setback.
But clearly, the Hyperliquid platform is not done making headlines. It has once again found itself in the crypto spotlight following a manipulation of its XPL token pre-market, launched on August 22. This cryptocurrency is associated with the Plasma blockchain project for stablecoins, supported by Bitfinex and Tether (USDT).
A procedure apparently carried out by four whales, generating a profit of $46 million… the main consequence of which was to trigger the simultaneous liquidation of $17 million in positions, most of which were open to the downside (short squeeze). However, there were no notable malfunctions for those responsible for the Hyperliquid DEX.
Hyper XPL experienced a period of high volatility, during which the reference price increased approximately 2.5 times in a matter of minutes. Throughout this period, the Hyperliquid blockchain functioned as expected, without any technical issues, first executing liquidations against the order book and then, in accordance with its public specifications, resorting to auto-deleveraging (ADL).
Hyperliquid
New guarantees for its hyperps
Following this manipulation of the XPL pre-launch market, the developers of the Hyperliquid DEX have indicated their willingness to make further improvements to their perpetual contracts, known as hyperps, in order to “provide a mathematical formula setting the liquidation price limits for over-collateralized shorts.”
As a result, after the next upgrade of its native blockchain, Hyperliquid will cap the reference price of its hyperps “at 10 times the 8-hour exponential moving average (EMA) of the reference price.” This is a way to offer clearer risk limits to its traders, while encouraging liquidity provision during periods of high volatility.
In addition to this, Hyperliquid will also introduce “the consideration of pre-launch external perpetual contract prices for the same asset,” such as Binance’s pre-market XPL. This comparison is necessary to ensure greater reliability of price signals.
In any case, Hyperliquid officials are quick to point out that these changes “would not have changed anything in terms of liquidations or auto-deleveraging (ADL)” in the case of the manipulation carried out against the XPL pre-market.
