Hyperliquid-Based Hyperdrive Resumes Services After $700K Exploit

Hyperdrive has successfully resumed its operations and compensated users following an exploit in June that resulted in significant fund losses from two markets on the Hyperliquid blockchain.

Key Takeaways

Hyperdrive has resumed full operations after a $700K exploit that targeted its Primary and Treasury USDT0 markets.
The attack occurred on September 27 when attackers exploited weaknesses in the router contract.
Affected users have been compensated, and the security gap has been addressed.
Hyperdrive plans to enhance security measures and continue focusing on yield strategies despite the incident.

Hyperdrive resumes operations after exploit

Return to Operations

Hyperdrive, a decentralized finance (DeFi) protocol operating on the Hyperliquid blockchain, has rebooted its activities and reimbursed impacted users after an exploit siphoned approximately $700,000 from two markets. An update released on X (formerly Twitter) on September 29 confirmed that all accounts affected by the attack have been restored, and market functions are now operational again. The team noted that the breach was restricted to the Primary and Treasury USDT0 markets, ensuring that other assets and contracts were unaffected.

Exploit Details

The attack took place on September 27 when hackers exploited a vulnerability in Hyperdrive's router contract, which held operator permissions during lending operations. This flaw allowed them to manipulate collateralized positions and call functions on whitelisted contracts at will. Two accounts suffered losses of 672,934 USDT0 and 110,244 thBILL tokens. The stolen assets were traced back through the Ethereum eth3.24% network and BNB BNB bnb4.11% Chain, where portions of the funds were laundered using Tornado Cash. Hyperdrive engaged external auditors and forensic specialists, who quickly confirmed the vulnerability's patching within hours. All market activities were temporarily halted until user compensation was completed.

Ongoing Security Measures

Hyperdrive has indicated that the recent exploit was conducted by a known threat actor previously associated with several high-profile DeFi exploits. The team is preparing a comprehensive post-mortem report which will be released shortly. While they assure users that their accounts are now secure, they have also warned against potential scams and unofficial communications.

Despite experiencing this setback, Hyperdrive remains committed to its long-term strategy, which includes focusing on yield-generating initiatives such as tokenizing Treasury bills in collaboration with partners like Theo Network. The team seeks to build user trust while advocating for enhanced security audits throughout the ecosystem.

This incident underscores the risks inherent to the Hyperliquid hype7.3% ecosystem, which has also witnessed a separate $3.6 million rug pull involving another protocol, HyperVault, built on the same platform. With Hyperliquid maintaining only a limited number of validator nodes, challenges related to centralization and system security persist.