Hyperdrive, a DeFi yield protocol operating on the Hyperliquid ecosystem, has committed to restoring market operations and reimbursing affected users after a breach that forced it to pause all markets and suspend withdrawals.
In its latest update, the team says it has identified and fixed the root cause and expects full functionality to resume within 24 hours.
Hyperdrive promises compensation
Hyperdrive’s latest communication asserts that the flaw has been fixed and that markets should resume within a day, if not sooner. The team says it has already identified the affected accounts and will implement a compensatory plan. However, details on compensation terms have not yet been disclosed.
Users are cautioned against interacting with the protocol or sending funds until full functionality is confirmed. Hyperdrive reiterated the need to trust only its official channels and warned against scams, particularly unsolicited direct messages requesting keys.
A transparent and timely post-mortem, full reimbursements, and clear communication could help undo reputational damage. But any failure to deliver promised repayments, or further security lapses, could erode user confidence irreversibly.
If the compensation plan succeeds and markets resume, Hyperdrive may salvage much of its standing. But if not, the incident could mark a turning point for governance scrutiny in the Hyperliquid ecosystem, which just launched its own USDH stablecoin on September 24, as Cryptopolitan reported.
Despite Hyperdrive’s reassurances, community sentiment around it and other Hyperliquid-based protocols is not at optimal levels right now. Arthur Hayes, co-founder of BitMex, who has been bullish on Hyperliquid, recently dumped all his HYPE tokens.
The Hyperdrive exploit adds to the ecosystem’s headache, as it came barely 48 hours after a separate project, HyperVault, saw a $3.6 million outflow in what is now suspected to be a rug pull.
HyperVault’s X account has been deleted, and its website is reportedly inaccessible. Earlier this year, Hyperliquid was also hit by the JELLYJELLY manipulation in March, which led to the token’s delisting.
Services to resume after brief pause post-exploit
On September 27, Hyperdrive posted on X that it had become aware of issues impacting its protocol, specifically in the Primary USDT0 Market and Treasury USDT Market. To contain potential damage, the protocol halted all interest mechanisms, paused markets, and suspended withdrawals.
In a follow-up post released hours later, Hyperdrive declared that the root cause had been identified and rectified, and that a compensation plan for affected accounts would be deployed soon. The team said markets should return to normal operations within 24 hours.
According to third-party reporting, the exploit affected two user accounts in the Treasury market and is estimated to have drained around US$773,000. Blockchain analytics indicate that the stolen funds were divided and bridged to BNB and Ethereum via the debridge protocol, with 288.37 BNB and 123.6 ETH going to the respective chains.
Exploit took advantage of technical fault
The vulnerability that was reportedly exploited in this incident appears to come from a flaw in its router contract. This allowed the attacker to invoke arbitrary calls on contracts in the whitelist and bypass the platform’s security to move user funds from the thBILL Treasury Market.
Analysts claim the attack looks like the work of a professional; however, the narrow scope, limited to two markets, allowed Hyperdrive to contain damage before it became a protocol-wide compromise.
For the Hyperliquid ecosystem, this isn’t good news, as it is coming amid increasing concern about the network’s security posture. Analysts say the cluster of incidents is testing users’ confidence in the Hyperliquid stack.
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