Bybit CEO Ben Zhou commented on a recent $ 4 million loss suffered by decentralized exchange (DEX) Hyperliquid due to a trade with high -leverage ether, noting that centralized exchanges (CEX) face similar challenges.
On March 12, a crypto investor walked away with $ 1.8 million and forced the Hyperliquidity Pool (HLP) to bring a $ 4 million loss after a trade that uses action on Hyperliquid Decentralized Exchange (DEX).
The businessman used Nearly 50x leverage to be $ 10 million in a $ 270 million ether (Eth) long position. However, the entrepreneur cannot come out without a tank of their own position. Instead, they withdrew collateral, offloading assets without triggering a self-loss price, leaving hyperliquid to cover losses.
Smart Contract Auditor Three Sigma Says Trade is a “brutal game of liquidity mechanics,” not a bug or an exploitation. Hyperliquid also made it clear that this is not a protocol being exploited or a hack.
Source: Hyperliquid
Hyperliquid lowers leverage trading for BTC and ETH
In response to the trade, Hyperliquid lowered its bitcoin (Btc) Leverage at 40x and the ETH leverage allowance at 25x. This increases margin maintenance requirements for a larger position in Dex. “This will provide a better buffer for backstop liquids of larger positions,” Hyperliquid said.
In an x post, the bybit CEO Commented In trade, saying that CEXs have also undergone the same situation. Zhou said their destroying engine takes place in whale positions when they become liquid. While lowering leverage may be an effective solution, Zhou said it could be bad for business:
“I can see that HP has lowered their overall action; that’s a way to do it and maybe the most effective, however, it will hurt the business because users want higher action.”
Zhou suggested a more dynamic mechanism of risk limit that reduces overall action as the position increases. The executive said that on a centralized platform, the whale would decrease to a 1.5x leverage with a large amount of open positions. Despite this, the executive acknowledges that users can still use multiple accounts to achieve the same results.
The Bybit CEO added that even decreasing action capabilities could still be “abused” unless Dex implemented risk management steps such as tracking and monitoring to see “market manipulators” at the same level as a CEX.
Related: Crypto Trader gets a sandwich attacked in Stablecoin Swap, lost $ 215k
Hyperliquid sees $ 166m net outflow
Following the Eth Whale extermination event and the losses suffered by the HLP vault, the protocol experienced a massive flow of its ownership under management. Dune analytics data Shut up That hyperliquid had a net ranging $ 166 million on March 12, the same day as trade.
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