Hyperliquid announced on Tuesday that it has added a new safety measure after its pre-launch XPL perpetual market saw a sudden 2.5x price surge that triggered widespread liquidations and left many traders stunned.
This was caused by whale traders who swept the entire order book. This pushed prices higher in minutes and forced the platform to use its emergency auto-deleveraging, which is an emergency step when margin is not enough to cover losses.
According to data from Coinglass, most of the damage was on short positions, while four addresses that joined the short earned a combined profit of $46 million.
Hyperliquid’s XPL/USD contract spiked to almost $1.80 late Tuesday before correcting and later jumped again near $1 on today, which is far above Binance’s XPL high of $0.55.
XRL Token and Plasma
XPL is the token of Plasma, a new blockchain backed by Bitfinex and focused on stablecoins. Plasma raised around $373 million in a public sale in July, which was completed in only ten days.
Even though the token has not officially launched yet, it already trades on special pre-listing platforms, including Hyperliquid and Binance.
No Technical Failure
After the event, Hyperliquid confirmed on its Telegram channel that there were no system errors. The team said its liquidation system worked as designed, first using the order book and then switching to auto-deleveraging.
Auto-deleveraging, also called ADL, is a last resort when the system cannot close positions without risk of bad debt. The platform also said its “hyperps” use isolated margin, which means losses stayed inside the XPL market and did not spread to other tokens or the wider protocol.
“Pre-launch markets are inherently unpredictable,” the team said. “The robust mark price formula for hyperps correctly prevented an instant spike, requiring several minutes of elevated order book prices before triggering liquidations.”
Some people warned that such events could hurt trust in Hyperliquid’s pre-market model. Others said the platform followed its rules and had no duty to give back losses. Hyperliquid reminded users that its protocol is permissionless and that every market comes with its own risk profile.
Hyperliquid React with New Safety Rules
As a response, Hyperliquid will roll out two updates. The first is a hard cap so hyperp prices cannot move more than ten times the eight-hour moving average. The second is adding external price data, like Binance’s contracts, to help give stronger price signals in markets with low liquidity.
The team said that these changes would not have stopped the recent liquidations but will help in future.
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