Original Title: "The 5 AM 'Harvest': Who Orchestrated the Hyperliquid XPL Extreme Pump?"

Original Author: KarenZ, Foresight News

Starting at 5:50 AM on August 27th, a heart-pounding extreme price action unfolded on the decentralized derivatives trading platform Hyperliquid: its token XPL (pre-market) surged nearly 200% in just 5 minutes before swiftly retracing, triggering massive short liquidations and community controversy.

Event Recap: Wild 5 Minutes, Rollercoaster Price Action

According to Hyperliquid's market data, the XPL price skyrocketed starting at 5:50 AM on August 27th, Beijing time, soaring rapidly from around $0.6 to a peak of $1.8, with the price almost tripling in a matter of minutes. However, this frenzy was short-lived—the price retraced shortly after reaching its peak and is currently fluctuating around $0.061.

Coinglass data shows that the XPL/USD short liquidation amount on Hyperliquid in the past 4 hours amounted to $17.67 million.

Notably, at the same time, on centralized exchanges such as Binance and Bitget where XPL perpetual contracts were listed, the XPL price did not experience significant fluctuations. This discrepancy has raised community concerns about price manipulation.

Mastermind Behind It: Two Addresses Profited $27.5 Million

Further blockchain analysis through HypurrScan reveals that the address starting with 0xb9c began positioning itself two days ago (August 24th), initially making 6 transactions to deposit a total of 10.98 million USDC into Hyperliquid and then starting to accumulate XPL long positions. Early this morning at 5:35, it deposited an additional 4.993 million USDC into Hyperliquid.

Subsequently, the address starting with 0xb9c began placing multiple XPL long orders on August 27th starting at 5:36, with individual order sizes mostly ranging from tens of thousands to hundreds of thousands of dollars, and began closing long positions at 5:53. When XPL dropped to around $0.6, the address longed XPL again. Currently, the XPL contract position value of the address starting with 0xb9c on Hyperliquid is $8.28 million.

Around 08:10 in the morning (UTC), an address starting with 0xb9c conducted two transactions to collectively "withdraw" nearly 600,000 USDC, after which no further action was taken.

According to analysis by @ai_9684xtpa, the address directly emptied the entire order book, squeezing all short positions (mainly 1x leverage hedging positions), earning $16 million in just one minute.

Furthermore, according to analysis by Emberu, the XPL liquidation manipulator on Hyperliquid should have made profits of up to $27.5 million by ambushing long positions through two wallets, then pushing up the price to trigger automatic liquidation. The address starting with 0xb9c raised the XPL price, triggering a chain reaction of liquidations that ultimately led to automatic closure at a price between $1.1 and $1.2. An address under the username "silentraven" (starting with 0xe417) on DeBank had accumulated long positions of 21.1 million XPL at an average price of $0.56 over the past three days on Hyperliquid. After the liquidation was triggered, the position was automatically closed at an average price of around $1.15, earning $12.5 million.

Some community members have also pointed fingers at Justin Sun. @ai_9684xtpa stated, "The rumors regarding Brother Sun are because they keep tracing back the source of the funds. This address had transferred ETH to a Justin Sun-related address five years ago, but there is no direct evidence to prove that this is Brother Sun."

Key Issue Exposed: Structural Risks of DeFi Perpetual Contracts

This event has revealed several key vulnerabilities in DeFi perpetual contract platforms:

· Dependence on a Single Oracle, Easy Price Manipulation: Hyperliquid's perpetual contract oracle price does not rely on any external data; the funding rate is determined by the moving average of the Hyperp mark price. XPL, as a pre-issued token, relies solely on a single price oracle, making its price easily manipulable. Whales can quickly pump the price through massive buy orders, easily surpassing the liquidation threshold.

· Lack of Position Concentration Control: Whales Can Control the Market: Currently, most DeFi contract platforms do not set a position limit for a single user, allowing whales to influence market prices and the liquidation mechanism through large holdings.

Many users believe that "1x leverage hedging" carries extremely low risk and is a stable strategy, thus relaxing their vigilance against extreme market conditions. However, in the high volatility of the crypto market, even seemingly "safe" strategies are vulnerable to price manipulation and black swan events. The mass liquidation of 1x leverage hedge positions in this case is a typical example.

@Cbb0fe stated, "In this XPL liquidation event, a 10% hedge was conducted on their XPL token asset on the HyperliquidX platform, using 1x leverage for a short position and providing a significant amount of collateral for protection. However, it still resulted in a $2.5 million loss. The user mentioned that they will 'never touch such an isolated market again'."

Insights

This "five-minute storm" was not only a typical market manipulation case but also exposed the weaknesses of DeFi derivative protocols in risk management, oracle mechanisms, and position management. Without improvements, similar issues could likely arise in other DeFi perpetual contract or tokenized stock synthetic asset platforms.

For traders, it is essential to realize that in the cryptocurrency market, lacking clear regulation and robust risk management, even seemingly robust hedging strategies can "go to zero" in the face of whale manipulation and extreme volatility. The "tuition" in the crypto market is often expensive, and respecting risks and making rational decisions are key to long-term survival.

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