How Hyperdrive’s Protocol Was Hacked: $782K in Tokens Stolen

Hyperdrive, a lending protocol built on the Hyperliquid network, fell victim to a serious exploit. Attackers drained around $782,000 worth of tokens in what blockchain analysts are calling a clear case of a smart contract vulnerability. 

The incident has once again raised concerns about the growing wave of DeFi security breaches, reminding investors and developers alike that vulnerabilities in smart contracts remain one of the most pressing risks in the sector.

How the Exploit Unfolded

According to blockchain data, the attacker targeted two pools on Hyperdrive: the Primary USDT0 Market and the Treasury USDT Market. From these, they extracted about 673,000 USDT0 stablecoins and 110,244 thBILL tokens, together valued at roughly $782,000.

The stolen assets were then quickly converted into cross-chain tokens, including BNB and ETH, before being moved off-chain. This tactic made it much harder for the funds to be tracked or recovered, a method seen repeatedly in past DeFi hack case studies.

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The Root Cause: Smart Contract Vulnerability

While Hyperdrive has not yet published a detailed postmortem, blockchain security firm CertiK stated that the attacker repeatedly exploited an arbitrary call within the router contract. 

This suggests that the breach stemmed from a flaw in the protocol’s coding, a reminder that even small oversights in smart contract logic can lead to large financial losses.

Such smart contract vulnerabilities are among the most common causes of DeFi exploits, as attackers often look for weak points in automated functions that handle user funds.

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Immediate Response from Hyperdrive

The Hyperdrive team acted quickly, pausing the protocol to prevent further damage. In a statement on X, they confirmed that the issue had been identified and corrected. 

They also promised a compensatory plan for users affected by the hack, though no details about how this plan will work have been shared publicly.

On Sunday, Hyperdrive reassured users that operations would soon return to normal, while also pledging to release a full postmortem once the investigation is complete.

A Pattern of Security Incidents in Hyperliquid’s Ecosystem

This incident marks the third major DeFi hack connected to Hyperliquid since the network launched in late November 2024. 

Earlier in March, a whale manipulated the onchain price of the Solana-based memecoin JELLYJELLY, causing Hyperliquid to absorb $12 million in losses. Another manipulation case had previously cost one of its vaults $4 million.

These repeated events underline the challenges of securing fast-growing DeFi ecosystems. While Hyperliquid continues to rise in market value and adoption, such vulnerabilities could weigh on user confidence if left unaddressed.

Read also: Is SafeBit a DeFi? No, It’s Not

Hyperliquid Market Performance

Despite the setback, Hyperliquid’s native token HYPE showed resilience. At the time of writing, HYPE was trading at $47.00, up by more than 4% in the past 24 hours, with a live market cap of over $15.8 billion. 

According to CoinMarketCap, the project ranks #11 globally, highlighting its significant position in the DeFi space.

The market reaction suggests that investors remain cautiously optimistic, though the true test will come once Hyperdrive releases its detailed plan for compensation and security upgrades.

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FAQ

What is so special about Hyperliquid?

Hyperliquid is special because it's a decentralized exchange (DEX) built on its own Layer-1 blockchain. This unique design allows it to offer traders very low fees, fast transactions, and advanced tools for derivatives trading, effectively combining the best features of both centralized and decentralized exchanges.

What is Hyperliquid?

Hyperliquid is a decentralized exchange (DEX) that focuses on perpetual futures trading. It runs on its own dedicated Layer-1 network. Its native token, HYPE, has been highly successful, becoming one of the top 20 cryptocurrencies by market capitalization less than a year after its launch.

What are the disadvantages of Hyperliquid?

The main disadvantages of Hyperliquid are its limited withdrawal options (it primarily supports USDC) and the fact that it does not support deposits in traditional fiat currency. Although it is decentralized, some users have also criticized it for appearing too centralized.

Who owns Hyperliquid?

No single person or company owns Hyperliquid. The infrastructure of the Hyperliquid Network and the Hyperliquid Blockchain is maintained collectively by a decentralized community of users, which means it operates without a central controlling entity.

Is Hyperliquid better than Solana?

It's difficult to say one is outright better than the other, as Solana has a much larger market size and ecosystem. However, Hyperliquid is showing very high capital efficiency and is quickly attracting support from institutional investors and the DeFi community because of its fast, composable order book.