Hyperliquid Vault Loses $4.9M in POPCAT Exploit—DeFi’s Latest High-Stakes Game
Another day, another DeFi exploit—this time costing Hyperliquid's vault a cool $4.9 million. The attacker manipulated POPCAT's pricing mechanism, proving once again that yield farmers aren't the only ones gaming the system.
How it happened: The attacker exploited a vulnerability in Hyperliquid's oracle pricing, artificially inflating POPCAT's value before draining funds. Classic 'pump-and-dump'—except the protocol foots the bill.
Why it matters: This isn't just about lost funds. It's a stark reminder that even 'smart' contracts have dumb vulnerabilities when dollar signs cloud judgment.
The irony? The same week Wall Street banks get fined billions for 'risk management failures,' crypto takes the heat for being 'too risky.' Some things never change—except your wallet balance after an exploit.
Temporary pause and rapid response
As the incident unfolded, Hyperliquid halted deposits and withdrawals through its Arbitrum bridge. Coinbase’s Director Conor Grogan noted that withdrawals were halted for more than 20 minutes before resuming.
An administrator on Hyperliquid’s Discord, going by the name ‘iliensinc,’ clarified that the Hyperliquid blockchain itself was not impacted. “The Arbitrum bridge’s automatic locking was triggered by a conservative set of conditions, and the bridge was unlocked after the situation was thoroughly investigated within ~25 minutes. Funds are safe,” he amplified.
The pause and subsequent fallout reignited community discussions about the risks on how manipulation in low-liquidity markets can cascade into systemic losses — even on decentralized platforms built to resist such attacks.
POPCAT price drops 19% after Hyperliquid chaos
The POPCAT token, a Solana-based memecoin that surged in popularity earlier this year, dropped sharply after the liquidation event.
According to data from CoinMarketCap, POPCAT’s price fell around 19% in 24 hours to $0.1262, extending its yearly losses to more than 91%. The coin’s market capitalization now stands at roughly $123 million, reflecting shaken investor confidence after the trading chaos.
Despite the decline, on-chain activity remained elevated as traders speculated on short-term price volatility. POPCAT’s liquidity, however, thinned out further, amplifying fears of similar manipulation attempts in the future.
Not the first manipulation on Hyperliquid
It is not the first occasion that Hyperliquid has encountered such a challenge. In March this year, the platform suffered a manipulation incident of the JELLYJELLY memecoin of Solana, as a trader shorted the token, compelling the HLP vault to take on about $12 million of unrealized losses.
The event triggered the demand of stricter risk management and Hyperliquid delisted JELLYJELLY, which was criticized to have its governance not as decentralized as it purports.
Event exposes DeFi’s leverage and liquidity risks
The Hyperliquid-POPCAT event underscores the delicate nature of the relationship between decentralization, leverage, and liquidity. Although the decentralized exchanges are transparent and have the benefit of the user control, they are prone to market manipulations and quick liquidations, particularly when traders take advantage of the thinly traded markets.
In the case of Hyperliquid, the episode can lead to reevaluation of its leverage model and risk management, especially in its community vault structure. To the wider DeFi community, it is an example of how harmful unregulated leverage in memecoin markets can be – where speculation can easily surpass the stability.
At this point, Hyperliquid has not given a clear schedule of when it will be able to restore deposits and withdrawals. To traders and investors, however, Wednesday was a bright reminder, in decentralized finance, manipulation and market shocks can still strike hard and fast.
Also Read: Trade.XYZ Expands Hyperliquid with Grabbing APPL, MSFT HIP-3 Tickers
