Hyperliquid Traders Trapped in Positions During API Outage: Chaos Erupts as $538M Frozen
- What Happened During the Hyperliquid API Outage?
- How Did the Outage Affect Open Positions?
- Were Funding Rates a Factor?
- How Extensive Was the Damage?
- Could This Happen on Centralized Exchanges?
- What’s Next for Hyperliquid?
- FAQ: Hyperliquid API Outage Explained
On July 29, 2025, Hyperliquid, a leading decentralized perpetual futures exchange, experienced a critical API outage lasting 27 minutes, leaving traders unable to close positions or manage risk. The incident, which coincided with negative funding rates and a volatile BTC market, locked over 500,000 accounts and $538M in funds. While speculation swirled about a coordinated attack, Hyperliquid’s team has yet to clarify the cause. This breakdown explores the event’s impact, trader reactions, and lingering questions about decentralized exchange resilience.
What Happened During the Hyperliquid API Outage?
At 14:20 UTC, Hyperliquid’s API suddenly went dark. Traders reported being completely locked out—unable to close positions, cancel orders, or even add margin. The outage lasted until 14:47 UTC, but for those 27 minutes, panic spread like wildfire across crypto Twitter. One trader, @kismet_wtf, tweeted: “Getting error messages on Hyperliquid on laptop and mobile. Can’t close positions, can’t add margin. Orders can’t cancel. Can’t connect on phone. I’m freaking out. Anyone know what to do?”
How Did the Outage Affect Open Positions?
With the API down, all open positions became untouchable. This was particularly dangerous as BTC had just reversed direction below $118,000—a move that WOULD typically trigger liquidations. Notably, whale James Wynn found himself stuck in a risky PEPE long position with $63,000 in unrealized losses. Partial liquidations did occur during the outage, suggesting some automated systems remained active while manual interventions were impossible.
Were Funding Rates a Factor?
Interestingly, multiple Hyperliquid funding rates turned negative just before the outage. In perpetual swaps, negative rates typically indicate excessive long positions. Some traders speculated this could have been a motive for a potential attack, though no evidence has surfaced. “When funding goes negative that sharply, someone’s usually about to get squeezed,” remarked BTCC analyst David Chen. “The timing with the API failure was… suspicious.”
How Extensive Was the Damage?
DeFiLlama data shows $538M was effectively frozen during the incident. Over 500,000 accounts were impacted—a staggering number considering Hyperliquid’s typical daily active users hover around 75,000. The exchange’s native token, HYPE, surprisingly held steady at $43.69 throughout the crisis.
Could This Happen on Centralized Exchanges?
Ironically, the outage highlighted a paradox of decentralized exchanges. While Hyperliquid settles all trades on-chain, its frontend and API remain centralized points of failure. “This wasn’t a blockchain issue—Hyperchain kept producing blocks,” noted developer Maya Patel. “It shows even in DeFi, we’re still reliant on traditional web infrastructure.”
What’s Next for Hyperliquid?
As of July 30, the team hasn’t released a post-mortem. Traders are demanding answers about:
- Why stop losses failed to trigger
- Whether affected positions will receive compensation
- Plans to prevent recurrence
The incident has reignited debates about decentralized exchange architecture. Perhaps the only silver lining? It wasn’t another FTX-style collapse—funds remained safely on-chain, just temporarily inaccessible.
FAQ: Hyperliquid API Outage Explained
How long did the Hyperliquid outage last?
The API was down for 27 minutes from 14:20 to 14:47 UTC on July 29, 2025.
Could traders access their positions through other means?
No—the outage affected all interfaces including mobile apps and web platforms, blocking all position management.
Did the outage affect Hyperliquid’s blockchain?
No, Hyperchain continued operating normally. The issue was limited to the API and frontend systems.
Were any traders liquidated during the outage?
Yes, partial liquidations occurred automatically, but traders couldn’t manually intervene to prevent them.
