POPCAT, one of the older meme tokens, caused chaos on Hyperliquid, as one whale used it to drain $5M from the liquidity pool. As a result, Hyperliquid closed deposits and withdrawals. 

POPCAT, a hot token from the initial meme boom, saw volatile trading in the past day. POPCAT briefly spiked to $0.20, lining up among the day’s top gainers, then crashed back to its usual range of $0.13. 

The token has been sliding in the long term, with long periods of low trading activity. In the past day, though, POPCAT saw its volumes rise by 10X, up to $230M. 

POPCAT was traded through multiple wallets

The recent POPCAT activity on Hyperliquid caused an immediate response on centralized markets, including Bybit, Gate, and even Coinbase. 

The real activity happened on Hyperliquid, through a series of connected wallets. On-chain analysis showed a multi-hour attack, through multiple addresses, trying to pass the liquidity as organic. 

What is even stranger is that the POPCAT whale suffered deliberate losses, but ended up harming the Hyperliquid liquidity pool. The whale lost a $3M long position, but the loss was absorbed by the pool. The whale also deliberately posted POPCAT buying orders at a higher price, then stopped the buying and caused long liquidations for their own position, and for all other traders. The $20M in buying orders were just spoofing high demand, causing a temporary price rally for POPCAT.

At the time of liquidation, the whale’s position had a notional value of up to $30M. The total losses for the Hyperliquid pool, supplied by users and decentralized providers, are as much as $4.9M. 

POPCAT manipulation was an attack on Hyperliquid

The Hyperliquid price manipulation resembles the previous episode of JellyJelly, which caused total liquidations for its Hyperliquid pool. The problem for these positions is that the liquidity vault ended up holding the position and incurring losses until Hyperliquid liquidated the position manually. The event once again showed that HLP vaults are risky, exposing all liquidity providers to unexpected losses. 

The current trading wallets were later linked to a group that swayed the price of TST on Hyperliquid in August. The event shows niche pools on Hyperliquid are at risk of deliberate attacks or aggressive trading. The HLP, which is supposed to serve as a safety net, had trouble absorbing the large positions. 

Later, the wallet holder bridged all USDC out of Hyperliquid’s ecosystem. 

POPCAT itself was relatively unharmed, but the deliberate spoof trading raised suspicions of a deliberate attack against Hyperliquid. The recent token price action showed Hyperliquid did not fix this bug after the attacks through JellyJelly and TST, potentially exposing other pools to losses.

For traders outside Hyperliquid, POPCAT also caused liquidations. Open interest crashed from over $114M down to $41M, with up to $61.79M in long liquidations. POPCAT was the most liquidated token after BTC and ETH, due to its representation on major centralized markets, showing the Hyperliquid price action spilled over to other POPCAT markets.

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