Bybit CEO Discusses Hyperliquid ETH Liquidation Incident
Bybit CEO Ben Zhou has weighed in on the recent Hyperliquid ETH whale liquidation that cost the platform $4 million. Zhou explained how a trader with a 175,000 ETH position,valued at around $340 million,managed to exit without causing a market crash.
The whale used 50x leverage and withdrew their floating profit and loss, pushing the liquidation price up. Once triggered, Hyperliquid’s HLP Vault took over the position at $1,915 per ETH, reducing leverage by half to cushion the fall. This strategy allowed the whale to make a “quick and clean” exit while Hyperliquid absorbed the loss.
Zhou highlighted that both centralized (CEX) and decentralized exchanges (DEX) face similar issues with leverage. He suggested implementing a dynamic risk limit mechanism to adjust leverage based on position size. This would lower leverage for larger positions, reducing the risk of massive liquidations.
However, Zhou noted that users could still bypass such measures by using multiple accounts. He believes DEXs need to adopt more risk management tools, like market surveillance and open interest limitations, to prevent abuse.
Hyperliquid has since lowered BTC and ETH leverage to 40x and 25x, respectively, to increase maintenance margin requirements for larger positions. The platform clarified that the $4 million loss was not due to a protocol exploit but rather the user’s withdrawal of unrealized profit and loss.
