Complete Gate Post tasks to upgrade your rank

Credit Ranking

[//]:content-type-MARKDOWN-DONOT-DELETE
![hype](https://gimg2.gateimg.com/image/article/1741926961hot.webp)

## Introduction

On March 12, 2025, a notable incident occurred at the decentralized derivatives exchange Hyperliquid.
**A large trader known in the industry as a 'whale' successfully made a profit of $1.87 million from the exchange through a carefully designed high-leverage trading strategy, while causing approximately $4 million in losses to Hyperliquid.** This event quickly became a hot topic in the cryptocurrency trading and DeFi risk management field.

By cleverly using high leverage, intelligent fund management, and precise timing, this trader built up a massive position, then strategically triggered a forced liquidation, shifting all losses to the exchange.

This incident has sparked widespread discussion in the blockchain finance and cryptocurrency trading community. Some professional traders see it as a legitimate arbitrage strategy, while regulatory advocates believe that this behavior exposes security vulnerabilities in decentralized exchanges (DEXs). This article will delve into the whale's ETH leveraged trading strategy, explain why Hyperliquid's risk control mechanism failed, and explore its impact on the future development of decentralized finance (DeFi) trading platforms.

## Whale's meticulous trading strategy for cryptocurrencies: detailed analysis of the Hyperliquid 3.12 event

This is not a lucky trade by chance. According to on-chain data analysis, this cryptocurrency whale investor has rich experience in derivative trading, and successfully executed multiple high-yield trades before the Hyperliquid event on March 12th:

March 2: Long BTC and ETH with 50x leverage, earning $6.83 million within 24 hours.
March 3: Short BTC before the US stock market opens, making a profit of $300,000.
March 10: Long ETH with 50x leverage, making a profit of $2.15 million in just 40 minutes.
March 11: Engage in rapid ETH trading, testing the market with a small profit of $5000.

![HYPE](https://gimg2.gateimg.com/image/article/1741927014hype1.png)

But on March 12th, he completed the largest operation to date.

### Step 1: Establish a large leverage position

The whale deposited $3.48 million into Hyperliquid and used 50x leverage to buy 17,000 ETH (worth about $31.2 million). It then continued to increase its position, increasing it to 170,000 ETH (worth about $343 million), driving up the market price.

### Step 2: Lock in profits and create liquidation traps

As the position value increased, the unrealized profit reached $8.59 million. However, instead of choosing to close the position, he withdrew $8 million from the account, leaving only $6.13 million as margin.

This is a key step: After the margin is reduced, the liquidation price is closer to the market price. If the price continues to rise, he can profit at a higher price; if the price slightly drops, he will be liquidated - but since most of the profit has been withdrawn, the actual loss is very small.

### Step 3: Trigger liquidation to make the exchange bear the loss

The market slightly dropped, triggering a forced liquidation. As the Hyperliquid system had to take over his position, but there were not enough buyers in the market, the exchange's HLP insurance fund had to bear losses—up to $4 million.

Meanwhile, the whale has already locked in a profit of $1.87 million and exited the market risk-free.

## DEX Vulnerability Analysis: Why Did Hyperliquid Suffer a $4 Million Loss?

From a security perspective of decentralized exchanges, this is not just a savvy trading strategy—it exposes multiple systemic risks and design flaws of the Hyperliquid platform. The following are the key factors that made this exploit possible:

### No position limit, allowing the use of substantial leverage

Hyperliquid does not strictly limit the maximum position size, allowing whales to build large positions with up to 50x leverage, enabling them to push market prices in their favor based on oracle data rather than market orders.

Unlike centralized exchanges (CEX) that use order books, Hyperliquid uses oracle price feeds to determine contract prices. On CEX, large market orders can cause slippage, making price manipulation difficult. On Hyperliquid, whales can buy and sell based on precise oracle prices, avoiding slippage impact.

## DeFi security measures upgraded: Hyperliquid's response strategy and industry feedback

After this incident, the Hyperliquid team quickly implemented a series of exchange security upgrades:

![](https://gimg2.gateimg.com/image/article/1741929962HYPE.webp)

1. Lower the maximum leverage: the maximum leverage for <a href="/ja/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> (BTC) trading has been reduced from 50 times to 40 times, and the maximum leverage for <a href="/ja/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> (ETH) has been reduced to 25 times
2. Optimize risk control system: Introduce a tiered margin system similar to centralized exchanges (CEX) to prevent large-scale market manipulation
3. Improving the liquidation mechanism: adjusting the operation of the insurance fund to better cope with extreme market conditions
4. Enhanced market surveillance: deploying more advanced abnormal trading detection algorithms

But are these measures enough to prevent similar behavior in the future? Some traders are not sure.

Zhu Su, co-founder of Three Arrows Capital, believes that the whale held short positions on a centralized exchange. When his long positions on Hyperliquid were liquidated, it triggered a temporary market crash, allowing his short positions to profit.

Other traders, like CryptoApprenti1, even believe this is a form of wash trading strategy - a form of market manipulation.

## The Future of DeFi Trading Security: Industry Insights from the Hyperliquid Incident

The Hyperliquid 3.12 incident has become a key turning point in the history of blockchain finance, revealing the inherent vulnerabilities of decentralized derivative trading platforms when faced with complex trading strategies. When an experienced trader walked away with a profit of $1.87 million and the platform suffered a $4 million loss, the entire industry had to rethink its security architecture. This case is not just about the savvy strategy of an individual trader, but also a wake-up call for the entire DeFi ecosystem.

For cryptocurrency investors, this event has revealed the value of understanding the exchange mechanism in depth - knowledge and insight can create opportunities that are difficult for ordinary people to discover. However, this has also sparked a discussion about trading ethics:
**What is legal arbitrage, and what crosses the moral boundary? When the boundary between trading strategies and system vulnerabilities becomes blurred, we need more mature industry standards.**

At the same time, liquidity management has also become a focal issue. In the Hyperliquid incident, when large positions needed to be liquidated, insufficient market liquidity led to huge losses. To address this challenge, many platforms are designing innovative liquidity incentive mechanisms to ensure sufficient trading depth even under extreme market conditions.

<div class="blog-details-info">
<div>Author: Rooick Z., Researcher at Gate.io
<div class="info-tips">*This article represents only the author&#39;s point of view and does not constitute any trading advice. Investing involves risks, so decisions should be made carefully.
<div>*This article is original, and the copyright belongs to Gate.io. Please indicate the author and source if you need to reprint, otherwise legal responsibilities will be pursued.
</div><p></p>
</div></div></div>

简体中文

English

Tiếng Việt

Español

Русский язык

Français

ภาษาไทย

Indonesia

Deutsch

عربي

Português (Portugal]

Português (Brasil]

繁體中文

Українська

福利中心

铭文导航-铭文Launchpad

铭文-铭文导航

铭文-web3startup

新币挖矿

小红花-Exchange-Startup

交易-创新交易

交易-盘前交易

打新

小红花-Learn & Explore-博客

小红花-Learn & Explore-快讯

币圈-币圈-未来事件

小红花-Learn & Explore-聊天室

小红花-Learn & Explore-直播

小红花-Learn & Explore-动态

年度账单

币圈

Gate OTC

芝麻金融-更多-财富管理

机构-APIs

机构-大宗交易服务

机构-经纪商项目

全球做市商计划

机构-托管和资产管理

机构借贷

机构-做市商项目

小红花-Promotions-机构和VIP服务

量化基金

机构-基础架构

机构-交易

机构-金融

结构化产品

机构-主页

衍生品-统一账户

芝麻金融-更多-抵押借币

vip服务

机构

策略跟单

现货跟单

合约跟单

跟单

量化策略-探索

量化策略-进阶

量化策略-基础

机器人广场

创建机器人

探索机器人

杠杆网格

无限网格

期现套利

组合指标策略

智能调仓

现货马丁格尔

合约网格

现货网格

交易机器人

芝麻金融-更多-ETH2.0挖矿

芝麻金融-更多-法币理财

USDE挖矿

链上赚币

芝麻金融-理财-双币宝

芝麻金融-理财-定期理财(屯币)

芝麻金融-理财-结构性理财

芝麻金融-理财-理财宝

芝麻金融-理财-余币宝

GT挖矿

芝麻金融-更多

芝麻金融-理财

赚币

模拟交易

衍生品-实盘跟单

衍生品-期权

衍生品-交割合约

衍生品-永续合约

衍生品-合约中心

合约入门

合约活动

衍生品

交易-量化策略

交易-杠杆ETF

交易-杠杆交易

交易-闪兑

交易-现货交易

交易

行情

买币-gateCard

卖币

买币-快捷交易

买币

买币-paywith

法币定投

小红花-推广

新手指南

活动中心

小红花-Learn & Explore-学院

任务广场

小红花-Exchange-最新公告

小红花-Exchange-帮助中心

小红花-Exchange-交易所

gate商店

小红花-Promotions-推荐官计划

小红花-Promotions-邀请计划

小红花-promotions-代理商

cextg小程序

储备金

合作伙伴

小红花

web3

Hyperliquid 3.12 Incident: A Strategic Trade That Cost the Exchange $4 Million