Ben Zhou is the CEO at Bybit. He shares with us his opinion on the Hyperliquid ETH whale liquidity which caused Bybit to lose over $4 million. He discusses the issues with CEXs, DEXs, and leverage.
Recent studies have shown that the number of people who are able to speak English is increasing. postZhou explained the mechanism of how the whale I was able pull off a huge feat liquidation With a position long of 175,000 ETHETHHe said the whale was able to make a profit of $340,000,000 with a leverage 50 times without causing a crash in the market. The whale, he said, was able make an “quick and clean” Hyperliquid can take the fall.
“Why not just try to hit the liquidation price by withdrawing floating P&L [profit and loss] and push the liquidation price up. Once it’s triggered, let HP take the whole position at the liquidation price, so its not your problem anymore. HP would suffer some loss,” Zhou, said
Bybit’s CEO went on to say that he would also elaborate by saying centralized You can also find out more about the following: decentralized Exchanges will often let their liquidation mechanisms absorb positions that are long when whales have to be liquidated. Hyperliquid’s HLP Vault took the position of the ETH whale at about $1,915 for each ETH. To cushion the drop, Hyperliquid lowered its leverage to half.
“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 then continued by referring to Hyperliquid’s $4 million losses.
In addition to lower leverage, he suggested platforms deploy tools as dynamic risk limits. This mechanism adjusts the leverage automatically based on overall position size. The leverage will decrease if the size of the position increases.
Zhou says that the CEX whale could have a leverage as high as 1.5x. He also admitted that there are limitations to the system, such as users being able to bypass it using multiple accounts. As not all exchanges utilize know-your-customer It is not expensive to have multiple accounts.
Zhou is of the opinion that DEXs must deploy additional risk management measures if they are to avoid such a problem. They include tools for market surveillance to identify market manipulators and abusers on the chain, as well as open interest limits.
“Even with this current dropped leverage (BTC to 40x , ETH to 25x) on Hyperliquid, it could still be abused, unless they start to introduce CEX level risk management or drop their leverage even lower,” Zhou, said
What ever happened to Hyperliquid’s vault?
A whale with 50x leverage opened a position worth $340,000,000 on Hyperliquid, March 12. A whale, after closing the position at 15 000 ETH transferred approximately 17.09 Million USDC.USDCThe address is written in the margin.
The platform released the liquidation of 160,000 ETH from its mechanism once the margin was withdrawn. Hyperliquid HLP, due to the large size of liquidation, took over and unraveled the position. Hyperliquid suffered a loss of more than $ 4 million.
The X accountHyperliquid has clarified that this $4 million loss is not the result of a cyberattack or protocol exploit. attack. The user, instead, withdrew while still having unrealized profits and losses, which reduced their margins and resulted in liquidation.
The whale still managed to make a profit, despite the liquidation. It made a net of $1.8million. The vault, on the other hand, lost over $4 million as it had to absorb the position. The protocol decided that BTC would be lowered (BTCETH and ETH Maximum Leverage to 40x and respectively 25x “increase maintenance margin requirements for larger positions.”
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Source: crypto.news
