Massive Position Liquidations at Hyperliquid Trigger a New Crisis in Decentralized Finance!

In the Web3.0 industry, those interested in cryptocurrencies and DEXs might have seen predictions last year in various media, including our magazine, that 'legislation related to cryptocurrencies will advance, leading to major investors entering the industry in 2025.' Indeed, with the entry of banks and stock exchanges, the overall asset volume in the industry has increased, and signs of growth have begun to appear. However, a chilling event occurred amidst these industry trends.

On March 12, 2025, a massive liquidation occurred suddenly at the major DEX 'Hyperliquid.' Due to a temporary shortage of funds, approximately $4 million was withdrawn from the HLP Vault pool funds, resulting in losses for all participants of Hyperliquid.

This incident ignited investors' anxieties. The following day, a flood of sell orders for Hyperliquid's core token 'HYPE' led to a drop of up to 8.5%.

Of course, the funds deposited in the HLP Vault are plentiful, and the operation was not significantly affected by a loss of around $4 million. The real issue highlighted by this incident is the vulnerability of DEXs that could be exposed with the entry of large-scale capital into the Web3.0 industry.

※1 'HLP (Hyperliquidity Provider)' is a protocol vault primarily for market making and liquidation processes. It is a type of fund pool on the Hyperliquid platform, where the community deposits funds and shares the profits derived from these activities.