Hyperliquid News Update: Significant Leverage, Limited Liquidity: POPCAT's $5 Million DeFi Breach

Hyperliquid, a prominent decentralized derivatives platform, suffered a $4.9 million loss after a trader orchestrated a deliberate manipulation involving the Solana-based

POPCAT. Market observers dubbed the exploit "peak degen warfare," as the attacker drove up the token’s value using leveraged long positions, then triggered a dramatic price collapse. about the security weaknesses of decentralized finance (DeFi) protocols, especially in markets with limited liquidity.

The perpetrator withdrew $3 million in

from the centralized exchange OKX, splitting the funds among 19 wallets to establish a leveraged long position worth $20–30 million in POPCAT. By setting up a $20 million buy wall at $0.21 per token, the trader artificially boosted the price, attracting more liquidity and sparking a brief surge. Once the buy orders were suddenly removed, POPCAT’s price crashed, causing a wave of liquidations. The attacker’s $3 million collateral was lost in moments, and Hyperliquid’s community-run Hyperliquidity Provider (HLP) vault in bad debt.

In response, Hyperliquid temporarily halted deposits and withdrawals on its bridge for over 20 minutes to stabilize operations. Blockchain analyst MLMabc explained that this step was necessary to manually close the attacker’s positions and prevent additional losses. " " to disrupt Hyperliquid, MLMabc said, pointing out that the trader took advantage of the platform’s automated liquidation process. While the pause interrupted user transactions, it to managing systemic threats.

This marks the third significant exploit Hyperliquid has faced in 2025, following a comparable attack on the memecoin JELLYJELLY in March, which left the HLP with $12 million in unrealized losses. Critics say the platform’s dependence on community-managed liquidity pools makes it susceptible to manipulation in illiquid markets.

that although Hyperliquid aspires to rival centralized exchanges in terms of liquidity, it is "still a long way off."

Following the incident, POPCAT’s price plunged 43%, falling from $0.21 to $0.12, and total liquidations on Hyperliquid soared to $63 million.

is now trading at $0.1262, with a market cap of $123 million. The manipulation also affected Hyperliquid’s native token, HYPE, which declined 7% to $38.25 as traders reassessed risk .

Industry experts caution that incidents like this highlight the instability of leveraged trading in DeFi. "When traders exploit liquidity gaps, the HLP, designed as a safeguard, ends up bearing the losses," one market participant commented. The event has led to renewed calls for enhanced risk controls and stricter leverage restrictions, especially for volatile assets such as memecoins

.

Hyperliquid has yet to announce when normal operations will resume, but the platform’s administrators stressed that the blockchain itself was not compromised. This incident underscores that even decentralized systems can be vulnerable to sophisticated manipulation, particularly when high leverage is combined with low liquidity

.