Table of Contents
Toggle
Carefully Designed Liquidation Operations
This time, a trader transferred millions of dollars worth of short positions in JELLY to Hyperliquid’s liquidity pool (HLP) through a similar operation. Subsequently, the price of JELLY surged, resulting in an unrealized loss of over 10 million dollars for the treasury, escalating the crisis. According to on-chain data and information compiled by analyst Yu Zhi, the sequence of events unfolded as follows:
Opening Positions and Margin Injection
On March 26 at 20:53 (assumed to be UTC), the address 0xde9593fe5cdc5cb0917f5d5618a111f1174f5c91 transferred 3.5 million USDC to Hyperliquid as margin and opened short positions for 430 million JELLY at an opening price of 0.0095 dollars, with a total value of approximately 4.08 million dollars.
Withdrawal of Margin and Forced Liquidation
Only 10 minutes later, at 21:03, this address closed out 30 million JELLY shorts (worth 310,000 dollars) at a price of 0.0103 and swiftly withdrew 2.76 million dollars in margin. This action led to the remaining 398 million JELLY shorts (valued at about 4.5 million dollars) being forcibly liquidated due to insufficient margin, which were taken over by Hyperliquid’s liquidation address 0x2e3d94f0562703b25c83308a05046ddaf9a8dd14 at a price of 0.0113.
Price Surge and Unrealized Losses
After the liquidation was completed, the price of JELLY skyrocketed from 0.01 to 0.04 dollars, an increase of up to 300%. As a result, the 398 million JELLY shorts held by the Hyperliquid liquidity pool incurred significant unrealized losses, which have now exceeded 10 million dollars. Analysts pointed out that it is highly likely that someone deliberately pushed up the price of JELLY on centralized exchanges (CEX), forcing Hyperliquid’s treasury to liquidate at a high price, further amplifying the losses.
Exchange Squeeze, Hyperliquid Chooses to Shut Down the Market
It is worth mentioning that many people in the market are calling for centralized exchanges to list JELLY, to let JELLY surge and give Hyperliquid a hard time. Binance and OKX indeed announced the listing of JELLY contract products within a short period.
To respond to the squeeze from centralized exchanges, Hyperliquid immediately announced the delisting of JELLY. Reports indicate that it ultimately settled the acquired short positions at a price of 0.0095 dollars, without incurring any financial losses. Although this move might attract dissatisfaction from users who have gone long on JELLY on Hyperliquid, it at least directly addresses the significant crisis at hand.
However, Hyperliquid’s official statement on Discord indicated that the foundation would fully compensate users for their losses: “Upon discovering suspicious market activity, validators quickly convened and voted to delist JELLY. All user losses, except from marked addresses, will be deducted from the Hyper Foundation’s corresponding funds. This will be automatically completed in the coming days based on on-chain data. No need to open a support ticket. Robustness and transparency are our top priorities.”
Meanwhile, JELLY also quickly plummeted due to the loss of motivation and narrative for price pumping.
Where Does Hyperliquid Go From Here?
Hyperliquid’s treasury has faced continuous challenges, and whether its liquidation mechanism needs to be adjusted has become a focal point of industry attention. For traders, such operations may represent short-term arbitrage opportunities, but for the platform’s long-term stability, it serves as a wake-up call. How Hyperliquid intends to address these issues and improve is worth close observation in the future.
