Hyperliquid
Summary
Hyperliquid suffered a documented ecosystem incident with reported losses of $37K on Arbitrum. This page tracks DeFiLlama's record of the event.
No evidence submitted yet — be the first.
Editorial decisions, corrections, and updates are anchored on Solana.
Validator Centralization Risks
Hyperliquid operates with only four validators securing billions of dollars in assets, creating significant centralization concerns. Security expert Taylor Monahan highlighted that this small validator pool creates a single point of failure, where if an executive's device were compromised, it could open the floodgates to dire consequences. A compromise involving three of the four validators could allow malicious actors to gain control over the network, approve unauthorized transactions, and drain liquidity pools. This centralized decision-making structure makes it easier for attackers to compromise network security, despite the platform's claims of decentralization.
- [1]MEDHyperliquid Under Fire: Security Concerns - Brave New Coinnews article
- [2]MEDWhy Validators Fail: Lessons from the Hyperliquid Incident - CCNnews article
North Korean Hacker Activity
In December 2024, Hyperliquid faced scrutiny after wallet addresses linked to North Korea's Lazarus Group conducted large transactions on the platform, moving Ethereum (ETH) around in a way that raised concerns. Security expert Taylor Monahan alleged that wallets associated with the DPRK were trading Ethereum on Hyperliquid, claiming these were not standard transactions but potential vulnerability tests, asserting 'DPRK doesn't trade. DPRK tests'. The allegations triggered over $256 million in fund withdrawals from the platform in just 30 hours, with December 23 alone witnessing net outflows exceeding $502 million. Hyperliquid Labs responded by denying any security breach, stating 'There has been no DPRK exploit—or any exploit for that matter—of Hyperliquid. All user funds are accounted for'.
- [1]MEDHyperliquid Under Fire - Brave New Coinnews article
- [2]MEDHyperliquid under scrutiny - Blockworksnews article
JELLY Market Manipulation Incident
In March 2025, Hyperliquid faced a major market manipulation incident involving the JELLY token that exposed critical vulnerabilities. An attacker opened two long positions and a short position on the JellyJelly token worth $4.1 million, then pumped the token's price across multiple exchanges, causing its value to increase by over 400% within a single hour. This manipulation temporarily caused the Hyperliquidity Provider (HLP) vault's unrealized loss to reach $13.5 million. When losses reached $12 million, the protocol's validators rapidly took action to delist the JELLY token, settling all positions at $0.0095 rather than the $0.50 market price, revealing the platform's centralized control despite decentralization claims. The attacker was able to withdraw $6.26 million of the $7.17 million deposited before the protocol froze their withdrawals.
- [1]MEDExplained: The Hyperliquid Hack (March 2025) - Halbornresearch
- [2]HIGHHyperLiquid Delists JELLY - CoinDesknews article
Additional Security Incidents
Beyond the JELLY incident, Hyperliquid has experienced multiple security issues throughout 2025. The platform received a C- risk grade due to multiple security incidents including the $13.5M JELLY exploit, a $21M private key compromise, and several vault exploits, revealing persistent security vulnerabilities. The Hyperliquid ecosystem also faced controversy when HyperVault, a project built on the platform, was accused of rug-pulling users for approximately $3.6 million, with suspicious transactions flagged by blockchain security firm PeckShield showing funds being bridged to Ethereum, converted to ETH, and funneled into Tornado Cash. These incidents highlight ongoing vulnerabilities in the broader ecosystem.
- [1]MEDIs Hyperliquid Safe? Risk Grade C- - Hindenrankresearch
- [2]HIGHHyperliquid-Based Project Faces $3.6 Million Controversy - Yahoo Financenews article
Business Model and Funding
Hyperliquid operates without traditional venture capital funding, which distinguishes it from most crypto projects. The platform's cofounder reiterated that no investor unlocks exist because it never raised external capital, with the 1.75 million tokens distributed exclusively to team members as part of vesting schedules. In 2024, Hyperliquid launched its native token HYPE via an airdrop to nearly 100,000 users, with over 20% distributed to core contributors under vesting until 2027-2028, and within three months HYPE achieved a market cap exceeding $9 billion. Recently, the platform has filed with the SEC to raise $1 billion through a SPAC merger, with proceeds intended for HYPE token purchases and ecosystem expansion.
- [1]MEDHyperliquid addresses external investor token sell-off - Cryptopolitannews article
- [2]MEDWhat Is Hyperliquid? - CoinLedgernews article
Platform Performance and Features
Despite security concerns, Hyperliquid has achieved significant market traction and technical performance. The platform has over 300,000 users and processes more than $4 billion in daily trading volume. Hyperliquid achieves sub-second finality and can handle up to 200,000 transactions per second. It has become the third-largest decentralized exchange in crypto, processing trillions of dollars in volume during its lifespan, trailing only PancakeSwap and Uniswap. The platform commands an estimated 70-80% of the decentralized perpetual futures trading market and consistently processes around $8 billion in daily trading volume with 30-day fee revenue reaching nearly $100 million.
- [1]MEDWhat Is Hyperliquid? - CoinLedgernews article
- [2]HIGHWhat Is Hyperliquid? The Decentralized Exchange - Yahoo Financenews article
Hyperliquid — $37K (2023-06-15)
DeFiLlama recorded a security incident affecting Hyperliquid on June 15, 2023, with reported losses of $37K on Arbitrum. Classification: Ecosystem. Technique: CEX Price Manipulation Attack.
- [1]HIGHHyperliquid — $37K (2023-06-15)research
Timeline
2023-02-01
Mainnet closed alpha launched
What Is Hyperliquid? The Decentralized Exchange - Yahoo Finance2024-11-01
HYPE token airdrop worth $1.6 billion distributed to nearly 100,000 users
What Is Hyperliquid? The Decentralized Exchange - Yahoo Finance2024-12-23
North Korean hacker allegations trigger over $256 million in withdrawals
Hyperliquid Under Fire - Brave New Coin2025-03-26
JELLY token manipulation incident causes $13.5 million loss to HLP vault
HyperLiquid Delists JELLY - CoinDesk2025-09-26
HyperVault project accused of $3.6 million rug pull
Hyperliquid-Based Project Faces Controversy - Yahoo FinanceResearch Gaps
4 open · agent-resolvableHeuristic next-actions surfaced for researchers and worker agents. Resolving these strengthens the page's evidence base and trust score.
- [high]no addresses
No on-chain addresses cited. Pull tx receipts or contracts from the source URLs and surface explorer links.
- [med]no regulatory
No regulatory or sanctions cross-check. Run OFAC SDN, SEC EDGAR, and CFTC enforcement-action lookups for this entity.
- [med]single source
Only one source has reported on this entity. Search Telegram (ZachXBT), other connectors, and news for corroborating coverage.
- [med]unarchived sources
Cited sources are not Wayback-archived. Run the archiver to pin their content before they rot.
model: claude-sonnet-4-20250514, defillama-connector
generated: 4/12/2026, 5:53:21 AM
avoid.net — verified advice for a post-truth world