Decentralised exchange Hyperliquid has refunded nearly $2 million to users affected by a recent outage, a move that has drawn praise from the crypto community and is expected to strengthen trust in decentralised trading platforms.
API Outage Lasted 37 Minutes
The outage occurred on Tuesday when Hyperliquid’s application programming interface (API) went down, preventing traders from executing orders for approximately 37 minutes. The issue was later identified as a traffic-related problem rather than a security exploit. Hyperliquid confirmed that the disruption, which began at 14:10 UTC and ended at 14:47 UTC on 29 July, was caused by a sudden surge in user activity following the platform’s record high in open interest.
Nearly $2 Million Refunded Voluntarily
On Monday, Hyperliquid issued refunds totalling $1.99 million in USDC to affected users, according to onchain data from Hypurrscan. This swift response drew widespread appreciation across social media. A trader using the handle “aaalex” posted on X, “Over $1.5m has already been sent out to users (can confirm). Incredible considering they have no legal obligation, no contract or SLA to do this.”
Source: Hypurrscan
The platform outlined a compensation structure based on three categories of affected users. While most users have already received their refunds, those owed over $10,000 must complete a Know Your Customer (KYC) verification process by 18 August to receive the remaining amount. These users have been partially compensated with $9,999 while they finalise their KYC through a Discord ticket system.
No Exploit Involved, Says Hyperliquid
In an official statement on Telegram, Hyperliquid clarified that the API issue was not due to any exploit or malicious activity. The platform explained, “The API returned error responses despite transactions being sent to the mempool and later included in blocks.” This clarification came after initial fears that the incident may have been linked to a hack.
Top derivative exchanges by open interest. Source: CoinGecko
The response stands in contrast to an earlier challenge the exchange faced in March when it suffered a $6.26 million exploit linked to the Jelly my Jelly (JELLY) memecoin. That incident was traced to vulnerabilities in its liquidation parameters. Despite the setback, Hyperliquid has continued to grow steadily.
Rising Star in Derivatives Market
Hyperliquid has emerged as a significant player in the crypto derivatives market. According to CoinGecko, it now ranks as the seventh-largest derivatives exchange globally, with over $10.6 billion in 24-hour open interest. This marks a significant leap from its 12th-place ranking at the start of April.
The recent reimbursement initiative is likely to boost confidence in decentralised exchanges (DEXs), which are gaining traction against centralised counterparts. As users seek more transparency and user-focused operations, Hyperliquid’s approach could set a precedent in the evolving DeFi landscape.
