Hyperliquid API Outage Triggers 27-Minute Trading Freeze HYPE Token Drops 5%

Hyperliquid experienced a significant disruption on July 29, 2025, when its API servers malfunctioned, halting all trading activity for nearly 27 minutes. The outage, attributed to a sudden surge in traffic, caused the platform’s front-end systems—including its mobile apps and website—to freeze. During this period, users were unable to open or close positions, execute trades, or withdraw funds. While Hyperliquid’s decentralized exchange (DEX) and layer-1 blockchain network continued to operate, the centralized front-end failure exposed critical vulnerabilities in its architecture [1].

The incident triggered an immediate 5% decline in the HYPE token, dropping to $42.87 from $45 shortly after the outage began. Although the token partially recovered to $44.25 in subsequent trading, investor sentiment remained strained, reflecting concerns over operational reliability. The outage coincided with a broader pattern of front-end vulnerabilities in decentralized finance (DeFi), where centralized interfaces often serve as single points of failure despite decentralized backends. Analysts highlighted that such incidents undermine the sector’s promise of resilience, as user-facing components remain susceptible to technical disruptions and attacks [1].

The outage mirrored similar events in the DeFi ecosystem. In May 2025, Curve Finance faced a DNS hijacking of its website, while Ethena Labs and Balancer experienced analogous front-end compromises in previous years. These cases underscore the irony of decentralized platforms relying on centralized infrastructure for user interaction. Critics argue that this duality—decentralized backends paired with centralized front ends—creates systemic risks. For instance, attackers have exploited DNS vulnerabilities to manipulate user access, as seen in Curve Finance’s 2025 incident. Meanwhile, Hyperliquid’s API downtime demonstrated how traffic spikes could paralyze trading activity, even if the underlying blockchain remains functional [1].

Hyperliquid’s response included a swift restoration of API services by 14:47 UTC. However, the platform’s transparency in acknowledging the issue via social media sparked mixed reactions. A tweet humorously noted that users could not short HYPE due to frozen front ends, a remark that drew both criticism for its tone and acknowledgment of the outage’s absurdity. The incident raised questions about Hyperliquid’s contingency planning for high-traffic scenarios and its ability to balance scalability with reliability. As the DeFi sector evolves, platforms must address these architectural trade-offs to maintain trust. For now, HYPE’s volatility reflects investor sensitivity to operational risks, a factor likely to influence the token’s long-term performance and Hyperliquid’s competitive positioning [1].

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[1] Hyperliquid API outage causes freeze on trading, HYPE down 5% (https://crypto.news/hyperliquid-api-outage-causes-freeze-on-trading-hype-down-5/)