Hyperliquid, a decentralized perpetual exchange, experienced a significant financial setback when a high-risk trader's actions led to a $4 million loss in its Hyperliquid Provider (HLP) vault. The incident involved a trader, identified by the wallet address 0xf3f4, who opened a 50x leveraged long position on Ethereum (ETH), valued at approximately $340 million. After initially closing part of the position and withdrawing $17.09 million in USDC, the trader's actions reduced the margin on the remaining 160,000 ETH long position, triggering large-scale liquidations. Hyperliquid confirmed that the trader managed to close their position with a profit of around $1.8 million, despite the $4 million loss to the HLP vault. The platform emphasized that HLP is not a risk-free strategy, although it maintains a historical net profit of approximately $60 million. In response to the incident, Hyperliquid announced plans to adjust the maximum leverage for Bitcoin (BTC) and ETH to 40x and 25x, respectively, to increase maintenance margin requirements for larger positions. The event led to a temporary drop in the value of Hyperliquid's HYPE token, which fell over 3% in the past 24 hours before rebounding slightly. This incident underscores the risks associated with high-leverage trading in decentralized finance platforms.