A recent high-leverage trade on Hyperliquid led to a $4 million loss for the decentralized exchange (DEX).
According to a post on X by blockchain security firm Three Sigma, a trader used 50x leverage to turn a $10 million stake into a $270 million Ethereum position.
They withdrew collateral, shifting the risk to Hyperliquid’s liquidity pool, which ended up covering the loss. The trader walked away with a $1.8 million profit.
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In response, Hyperliquid reduced its maximum leverage—Bitcoin
$82,020.77
was capped at 40x, and Ethereum
$1,883.57
at 25x. The platform explained that higher margin requirements would provide a better safety net for handling large liquidations.
Bybit
$2.53B
CEO Ben Zhou commented in a post on X, pointing out that centralized exchanges (CEXs) face the same risks when handling large liquidations.
He explained that when a whale’s position is liquidated, Bybit’s liquidation engine takes over. While reducing leverage is one way to manage risk, he acknowledged it could make the platform less attractive to traders.
Zhou suggested a more flexible system where leverage decreases as a trader’s position grows. On a centralized exchange, he explained, a position as large as the one on Hyperliquid would have its leverage reduced to around 1.5x.
Still, he admitted that determined traders could bypass restrictions by using multiple accounts.
Meanwhile, Garantex, a Russia-based crypto exchange, recently halted all services and put its website under maintenance. What happened? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
