{"id":22910,"date":"2025-04-10T14:00:00","date_gmt":"2025-04-10T11:00:00","guid":{"rendered":"https:\/\/forklog.com\/en\/the-price-of-popularity-and-a-lesson-for-all-hyperliquid\/"},"modified":"2025-04-10T14:00:00","modified_gmt":"2025-04-10T11:00:00","slug":"the-price-of-popularity-and-a-lesson-for-all-hyperliquid","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/the-price-of-popularity-and-a-lesson-for-all-hyperliquid\/","title":{"rendered":"The price of popularity\u2014and a lesson for all: Hyperliquid"},"content":{"rendered":"

After a generous airdrop<\/a> in November 2024, the decentralised exchange (DEX) Hyperliquid drew industry-wide attention and topped trading volumes, ahead of Jupiter<\/a> and dYdX<\/a>. High transaction throughput, no KYC<\/span> requirements and ample liquidity made the platform a welcoming venue for crypto whales.<\/p>\n

High-risk positions worth about $8m opened on the DEX on 26 March 2025 jeopardised<\/a> not only the platform\u2019s stability but also the safety of client funds in the Hyperliquidity Provider Vault (HLP). The actions of several large addresses formed part of a coordinated attack involving price manipulation on external trading venues.<\/p>\n

ForkLog reviewed the incident\u2019s timeline, reactions from industry leaders, rivals\u2019 \u201cconvenient\u201d moves and the defensive steps taken by Hyperliquid\u2019s management\u2014measures that have cast doubt on its decentralisation principles.<\/p>\n

The day of the attack<\/h2>\n

Hyperliquid uses liquidity pools<\/a> from the HLP treasury to hedge positions. When a user opens a position, the mechanism executes a corresponding hedging order. In the event of liquidation, the system continuously and smoothly buys back the asset, creating a spiral effect.<\/p>\n

Liquidations of short positions occur when prices jump sharply. Users can intentionally increase risk, minimising their own margin losses while shifting the burden to the HLP vault.<\/p>\n

The design of Hyperliquid\u2019s passive market-maker pools enabled manipulation of<\/a> the liquidation system, harming HLP. At the time, the vault held about $290m.<\/p>\n

According to the Hyperliquid team, at around 12:50 (UTC) on March 26 the DEX was attacked through manipulation of a thinly traded token\u2014JELLYJELLY. After detecting \u201csuspicious market activity\u201d, six validator votes initiated the delisting of perpetual contracts on the asset.<\/p>\n

\n

After evidence of suspicious market activity, the validator set convened and voted to delist JELLY perps. <\/p>\n

All users apart from flagged addresses will be made whole from the Hyper Foundation. This will be done automatically in the coming days based on onchain data. There is no\u2026<\/p>\n

\u2014 Hyperliquid (@HyperliquidX) March 26, 2025<\/a><\/p><\/blockquote>\n