Is a Security Crisis Heading For Hyperliquid? Flagship Protocol Hacked

The Hyperliquid blockchain, one of the fastest-rising names in decentralized finance (DeFi), is facing a mounting security crisis after a string of high-profile incidents cast doubt on the safety of its money markets.

On September 27, Hyperdrive, a flagship yield protocol on Hyperliquid, was forced to pause all markets following a confirmed exploit that drained an estimated $700,000 from two compromised Treasury Market positions.

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Price

Market Cap

HYPE

$168.35K

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What’s Behind the Hyperdrive Hack?

Positions on two accounts on the thBILL market have been compromised.

Hyperdrive has paused all money markets as a precaution while we investigate further.

This issue does not affect $HYPED.

— Hyperdrive (@hyperdrivedefi) September 27, 2025

Developers attributed the breach to a flaw in operator permissions: users had designated Hyperdrive’s Router as an operator, effectively granting it sweeping access to call any whitelisted contract. Attackers leveraged that loophole to manipulate positions and extract funds.

Hyperdrive insisted the thBILL asset and HYPED governance token were not directly impacted, but the damage extended beyond the stolen funds.

The incident marked the second major attack in 48 hours on Hyperliquid’s DeFi ecosystem. Just a day earlier, HyperVault, another yield protocol, saw $3.6M bridged out and laundered through Tornado Cash before its website went offline and social media accounts were deleted, pointing to an exit scam.

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Mounting Exploit Pressure on Hyperliquid: Network Under Siege?

The rapid sequence of losses has sharpened questions about Hyperliquid’s resilience. Community sentiment has shifted from celebrating Hyperliquid’s speed and composability to anxiety that the network is becoming a magnet for attackers.

Security researchers say the problems may run deeper than individual protocol missteps. Hyperliquid, launched just last year with a $1.6Bn HYPE airdrop, operates on a high-throughput chain built atop Arbitrum.

Its design, prioritizing ultra-fast execution, has long raised concerns about centralization. The network runs on just four validators, a concentration critics argue could make it highly vulnerable to coordinated breaches.

Those warnings gained traction in December 2024 when blockchain sleuths linked North Korean Lazarus Group wallets to test transactions on Hyperliquid.

MetaMask’s Taylor Monahan warned at the time that DPRK hackers were “kicking the tires” of the chain to identify exploits.

While Hyperliquid Labs dismissed the claims, the HYPE token plunged over 20% in a single day as investors fled.

(Source – HYPE USDT, TradingView)

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The latest breaches appear to have reignited those fears. On-chain analytics show rising net outflows from Hyperliquid protocols since Friday, with over $200M in USDC withdrawn in less than 24 hours.

The HYPE token, which reached a market cap above $11Bn earlier this year, has shed double-digit percentages in weekend trading.

The reputational hit extends beyond price action. Institutions exploring exposure to Hyperliquid are now weighing whether its young ecosystem can support the level of security required for scaling.

The fact that both Hyperdrive and HyperVault targeted yield-hungry retail users only deepens concerns that Hyperliquid has become fertile ground for opportunistic attackers.

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