Bybit CEO Ben Zhou, a man who probably knows more about leverage than a seesaw enthusiast, recently weighed in on the $4 million debacle at decentralized exchange Hyperliquid. Apparently, even centralized exchanges (CEXs) aren’t immune to the chaos caused by an Ether whale with a penchant for high-stakes gambling. 🐋🎲
On March 12, a crypto trader, who clearly missed the memo on moderation, turned $10 million into a $270 million Ether (ETH) long position using 50x leverage. But here’s the kicker: they couldn’t exit without nuking their own position. So, they did the next best thing—withdrew collateral and left Hyperliquid holding the $4 million bag. Smooth move, right? 💸
Smart contract auditor Three Sigma called it a “brutal game of liquidity mechanics,” which is just a fancy way of saying, “This wasn’t a bug, folks. Just someone playing fast and loose with the rules.” Hyperliquid confirmed it wasn’t a hack or exploit, but let’s be honest, it still stings. 🐍
Hyperliquid Tightens the Reins on Leverage
In a move that screams “never again,” Hyperliquid lowered its Bitcoin (BTC) leverage to 40x and ETH leverage to 25x. This means larger positions now require a heftier maintenance margin. Translation: no more YOLO trades unless you’re ready to pay up. 💼
Bybit’s Zhou chimed in on X, noting that CEXs face the same issues. Their liquidation engine takes over whale positions when things go south. While lowering leverage might be effective, Zhou pointed out it’s not exactly a crowd-pleaser: “Users want higher leverage,” he said, because apparently, some people just can’t resist playing with fire. 🔥
“I see that HP has already lowered their overall leverage; that’s one way to do it and probably the most effective one, however, this will hurt business as users would want higher leverage.”
Zhou suggested a dynamic risk limit mechanism that reduces leverage as positions grow. In a centralized platform, a whale’s leverage would drop to 1.5x with massive open positions. But let’s be real—users could still game the system with multiple accounts. Because where there’s a will, there’s a loophole. 🕳️
Zhou also warned that even lowered leverage could be “abused” without proper risk management. So, unless Hyperliquid starts playing detective, market manipulators will keep having a field day. 🕵️♂️
Hyperliquid’s $166M Exodus
After the ETH whale’s liquidation and the HLP Vault’s losses, Hyperliquid saw a net outflow of $166 million on March 12. Because nothing says “I’m out” like a nine-figure withdrawal. 🏃♂️💨
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2025-03-13 12:13