DeFi Disaster: The JELLY Exploit That Could Happen to You

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DeFi Disaster: The JELLY Exploit That Could Happen to You 🤯

DeFi Disaster: The JELLY Exploit That Could Happen to You

My dear friends, gather ’round and listen closely, for I have a tale to tell of a most unfortunate exploit, one that has left the good people of Hyperliquid exchange in a state of utter dismay. 💸

It appears that a certain Dr. Jan Philipp Fritsche, managing director at Oak Security, has been kind enough to enlighten us as to the particulars of this debacle. And, darling, it’s a doozy! 🤯

According to Fritsche, the JELLY exploit was not, in fact, the result of a bug, but rather a predictable failure, one that could potentially pose a risk to other DeFi protocols as well. Oh, the horror! 😱

“The attacker opened massive opposing positions in JELLY, knowing that one side would collapse and the other would cash out. Because payouts weren’t capped and risk wasn’t isolated, the protocol ate the loss—and the attacker walked away with millions,“ Dr. Jan Philipp Fritsche, Oak Security

Fritsche describes the exploit as a “textbook example of unpriced vega risk”, a concept from traditional finance that refers to the implied volatility of an asset. Ah, but, darling, it seems that many DeFi protocols still fail to account for this crucial risk metric. How…amateur. 🙄

Hyperliquid under fire for JELLY exploit

This isn’t the first time industry figures have criticized Hyperliquid over the Jelly incident. Following the exploit, Bitget CEO Gracy Chen called the exchange’s practices “immature, unethical, and unprofessional,” warning that it could become FTX 2.0. Oh, the shame! 😳

Although Hyperliquid has pledged to compensate users affected by the exploit, the damage to its reputation may already be done. More importantly, the exploit has drawn attention to broader vulnerabilities in the decentralized finance sector. And, darling, that’s just peachy. 🍑

In 2024, DeFi exploits cost users $308.7 million in losses. That was more than rug pulls, which accounted for $192.9 million. Just days after the Jelly exploit, a DeFi protocol SIR.trading fell victim to another exploit, losing all of its total value locked of $355,000. Oh, the humanity! 🤕

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2025-04-03 21:58