😱 Hyperliquid’s Jelly Wobble: FTX 2.0 Fears? 🍓

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In a move that would make even the most seasoned crypto gurus raise an eyebrow, Hyperliquid, the crypto derivatives platform, is now frantically rearranging its risk management deck chairs after the JELLY token took a swan dive into the ocean of liquidation. In a generous act of “we-sort-of-care,” they’ve decided to compensate those who held long JELLY positions at settlement with a princely sum of $0.037555. However, if you were flagged for bad behavior, you’re out of luck, buddy. 🙃

Hyperliquid: For users holding long JELLY positions at settlement, the Foundation will compensate them at a price of 0.037555. Hyperliquid will strengthen risk management: HLP will set limits on the Liquidator vault; if losses exceed the limit, ADL will be triggered; the open…

— Wu Blockchain (@WuBlockchain) March 28, 2025

What caused the Hyperliquid’s JELLY jitters?

It all started when a crafty trader decided to play a little game of ‘self-trade tennis’ with 4 million USDC worth of JELLY, selling it for the bargain price of $0.0095. This caused the JELLY price to moonshot like it was late for a space taxi, prompting Hyperliquid’s backstop protection system (HLP) to leap into action and liquidate the position. Unfortunately, in a twist of fate, HLP ended up being the one needing a backstop. 🚀💥

Now, Hyperliquid had some rules in place to stop such shenanigans, but it seems that when HLP took the wheel, it drove the risk bus straight off a cliff. Instead of pulling the automatic deleveraging (ADL) emergency brake, the system decided to keep calm and carry on, sharing collateral like it was going out of style. This little ‘oversight’ left HLP with a hole in its pocket where money used to be.

Bitget CEO Gracy Chen, in a moment of candid criticism, likened Hyperliquid’s risk management to a recipe for “FTX 2.0.” She pointed out that the way Hyperliquid handled the March 26 incident was akin to trying to put out a fire with a flamethrower. 🌪️

How is Hyperliquid picking up the pieces post-JELLY apocalypse?

Yesterday is a good reminder to stay humble, hungry, and focused on what matters: building a better financial system owned by the people. Hyperliquid is not perfect, but it will continue to iterate and grow through the collective efforts of builders, traders, and supporters.…

— Hyperliquid (@HyperliquidX) March 27, 2025

Hyperliquid is now rolling up its sleeves and getting serious about not repeating the March 26 fiasco. They’re putting the Liquidator vault on a strict diet, ensuring it can’t chow down on too much risk. Plus, they’re making sure that money from other vaults doesn’t automatically become a bailout buffet. If losses still go haywire, the ADL emergency button will be pressed to restore order. 🚨

Another shiny new update is that trading limits will now flex based on market size, like a muscle that’s actually useful. This should keep those pesky huge trades from playing seesaw with the market. And as if that wasn’t enough, Hyperliquid is introducing a voting system where validators get to play judge, jury, and executioner for assets that are slacking in the liquidity department. These changes are all about making the platform as safe as a baby’s crib. 🛏️

What’s got Hung Dang all riled up about the JELLY incident?

User extraordinaire, Hung Dang, had a moment of clarity and asked the question on everyone’s minds: what about those who bailed on the Vault before Hyperliquid swooped in like a superhero? If they cashed out early, they’re on their own, while those who stuck around might have been saved. It’s like a twisted game of musical chairs where no one knows when the music will stop. 🎶

In the end, the JELLY incident was a slap in the face for Hyperliquid, revealing that even in the wild west of crypto, you need more than just a fast horse and a good hat to survive. You need actual security measures. 🌵

FAQ

What Happened in the Hyperliquid JELLY Incident?

A self-trade of 4 million USDC in JELLY at a low price caused a sudden price spike. Hyperliquid’s liquidation system responded, but it ended up losing funds instead of protecting them.

Why Did Hyperliquid’s Risk System Fail?

The failure happened due to shared collateral across multiple vaults and no trigger for automatic deleveraging (ADL). This design flaw led to unexpected platform losses.

How Did the JELLY Token Price Spike So Drastically?

A user executed a self-trade at $0.0095, pushing JELLY’s price up by over 400%. This manipulated trade triggered liquidations and caused chaos in the system.

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2025-03-28 08:57