Hyperliquid Personal Investors Suffer $111 Million Loss in Perpetual Futures

Personal investor accounts on Hyperliquid’s perpetual futures market recorded $111 million (approximately 1.53 trillion won) in losses over a 15-month period, according to research published by Stanford University and Columbia Business School. The study, titled 'Who Loses and Why? Market Microstructure of Perpetual Futures,' analyzed on-chain trading data from Hyperliquid. The largest portion of these losses came from fees totaling $725 million (approximately 1.02 trillion won), followed by $22.6 million in forced liquidation losses and $15.4 million in voluntary trade losses. Researchers categorized participants based on wallet transaction patterns, interpreting frontend traders as primarily retail investors. Unlike traditional exchanges where fees may be passed to counterparties, Hyperliquid’s fees were retained by the exchange itself. The study noted that fee-related losses exceeded those from forced liquidations or voluntary trades. However, discrepancies exist between individual loss categories and total reported figures, making direct summation difficult. Researchers emphasized that losses weren’t solely due to incorrect price predictions but also stemmed from order types used, speed of execution desired, leverage settings, and liquidation conditions. Retail investors categorized as frontend traders showed a preference for immediate execution through market orders, which consume liquidity rather than provide it like limit orders (makers), leading to higher transaction costs. Perpetual futures allow positions to be held indefinitely without expiration but accumulate funding fees and trading costs over time. Leverage amplifies both potential gains and losses, increasing the risk of rapid liquidation if price movements erode margin levels. The research highlighted that while on-chain data from Hyperliquid made tracking wallet-level behavior easier compared to traditional exchanges, it doesn’t confirm identities—only transaction patterns. The findings are specific to Hyperliquid’s 15-month trading period and certain contracts, with applicability to other centralized exchanges or broader markets requiring further study.