$HYPE Papertrade, a 1,000x-leverage exchange that had just launched on the ecosystem, was soon hit by someone pushing prices back and forth using Hyperliquid’s ETH order book. Late last night, Beijing time, the team admitted that someone had attempted to manipulate the market and said it was now tightening position limits.
HYPE is the native token of the Hyperliquid blockchain, best known for its on-chain perpetual futures trading. Papertrade is built on its smart contract layer, HyperEVM.
Papertrade uses the midpoint between Hyperliquid’s best bid and ask at that moment as the execution price for each trade. With leverage this high, even a tiny price move can wipe out a trader’s margin. So someone could place a large order on Hyperliquid to push the price, then profit from high-leverage positions on the other platform.
The team said this wasn’t an oversight in the design: there was so much demand at launch that they deliberately set the position limits high to accommodate it. They also said the person who made money on the first night later tried again with a new account and ended up giving almost all of it back to the pool.
The counterparty on platforms like this is a shared pool funded by traders’ losses, and winners take money from that pool. In a chart posted by the team, the pool was at one point drained by a sizable amount before gradually recovering.
Hyperliquid’s own HLP vault has previously lost money due to a single whale’s large position. This time, a new platform built around its prices hit a wall on its very first day.
HYPE is the native token of the Hyperliquid blockchain, best known for its on-chain perpetual futures trading. Papertrade is built on its smart contract layer, HyperEVM.
Papertrade uses the midpoint between Hyperliquid’s best bid and ask at that moment as the execution price for each trade. With leverage this high, even a tiny price move can wipe out a trader’s margin. So someone could place a large order on Hyperliquid to push the price, then profit from high-leverage positions on the other platform.
The team said this wasn’t an oversight in the design: there was so much demand at launch that they deliberately set the position limits high to accommodate it. They also said the person who made money on the first night later tried again with a new account and ended up giving almost all of it back to the pool.
The counterparty on platforms like this is a shared pool funded by traders’ losses, and winners take money from that pool. In a chart posted by the team, the pool was at one point drained by a sizable amount before gradually recovering.
Hyperliquid’s own HLP vault has previously lost money due to a single whale’s large position. This time, a new platform built around its prices hit a wall on its very first day.