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Promote with Leviathan NewsHyperliquid disclosed that its original FRIEND‑USD perpetuals market oracle, which derived price from the FRIEND pool’s TVL, contained an exploitable design flaw and was flagged by multiple whitehat researchers. The vulnerability stemmed from the fact that an attacker could concentrate liquidity in the FRIEND pool to temporarily inflate total value locked, drive the oracle-derived index sharply higher, and then open or manage leveraged positions against this distorted mark price. Because Hyperliquid’s risk engine and liquidation logic rely on the oracle mark, this opened a path for market manipulation, unfair liquidations, and potential bad-debt creation if the exploit were executed at scale. In response, Hyperliquid announced index methodology changes for FRIEND‑USD, moving away from the TVL-based oracle design and updating how the mark price is computed to reduce manipulability. The team also committed to refund maintenance margin to users whose liquidations were tied to the vulnerable FRIEND‑USD oracle behavior, effectively compensating impacted accounts for the protocol-side design issue rather than treating outcomes as normal market risk. The episode highlighted the broader structural risk of oracle manipulation on derivatives DEXs—especially for small or illiquid assets—and fed into ongoing scrutiny of Hyperliquid’s oracle and liquidation architecture following other incidents, reinforcing the push for more robust index design, tighter risk controls on niche markets, and clearer user protections.
AI-generated background, compiled from web sources — not editorial content.
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