Hyperliquid News Today: DeFi 'Degen Warfare' Strikes: Hyperliquid Loses $4.9M to POPCAT Attack

Hyperliquid, a leading decentralized derivatives exchange, absorbed a $4.9 million loss after a coordinated manipulation of the POPCAT token, according to data from blockchain analytics platforms and on-chain sleuths, as CoinDesk reported. The attack, orchestrated by a single trader, involved withdrawing $3 million in USDC from centralized exchange OKX and distributing the funds across 19 wallets to create a leveraged long position of $20–30 million in POPCAT, as CoinDesk reported. The attacker placed large buy orders near $0.21 per token, inflating the price before abruptly removing liquidity, triggering a crash and cascading liquidations, as CoinDesk reported.

Hyperliquid's community-owned liquidity provider (HLP), designed to absorb failed trades, was forced to cover the remaining losses after collateral was exhausted, as CoinDesk reported.

The attack exploited POPCAT's thin liquidity and automated risk management systems, with the attacker liquidating their $3 million collateral within seconds of the price collapse, as CoinDesk reported. Hyperliquid temporarily suspended its Arbitrum bridge to stabilize operations, though deposits and withdrawals resumed within 25 minutes, as CryptoTimes reported. On-chain researcher MLMabc described the incident as a "deliberate attempt to mess with" Hyperliquid, emphasizing that no trader would risk $3 million "just due to stupidity or carelessness," as LookOnChain reported.

POPCAT's price plummeted 19% in 24 hours to $0.1262, extending its year-to-date losses to over 91%, as CryptoTimes reported. The token, a Solana-based memecoin, now has a market capitalization of roughly $123 million, reflecting eroded investor confidence, as CryptoTimes reported. Hyperliquid's HLP, which underpins the platform's risk management model, now faces scrutiny over its ability to handle such attacks, particularly in markets with low liquidity, as CryptoTimes reported.

This is not the first time Hyperliquid has faced manipulation. In March 2025, a similar attack on the JELLYJELLY memecoin forced the HLP to absorb $12 million in unrealized losses, as CryptoTimes reported. Critics have since called for stricter governance and risk controls, noting that decentralized exchanges (DEXs) remain vulnerable to exploitation despite their transparency and user-centric design, as CryptoTimes reported.

Market participants have labeled the POPCAT incident "peak degen warfare," a term highlighting the aggressive, high-risk tactics employed in crypto's volatile memecoin markets, as CoinDesk reported. One analyst noted the attack's simplicity: "Classic manufactured demand illusion followed by a flush. Nothing magical here. Just an attacker exploiting thin depth and automated LP absorption," they wrote on X, as CoinDesk reported.

Hyperliquid's HYPE token, which underpins the platform, has seen its price dip below key technical levels, with analysts warning of further downside risks if the $35 support level is breached, as FXStreet reported. Futures open interest for HYPE has also declined, reflecting waning retail demand, as FXStreet reported. The platform has yet to announce a timeline for resolving the incident or strengthening its risk protocols, as Blockonomi reported.

The attack underscores broader vulnerabilities in DeFi ecosystems, where leverage and liquidity imbalances can amplify systemic risks. As memecoin speculation grows, platforms like Hyperliquid may face increased pressure to balance decentralization with robust safeguards against market manipulation, as CryptoTimes reported.