Hyperliquid Liquidity Pool Faces Liquidation Crisis Again! Binance and OKX Join the Fray, Team Forced to Take a Hard Stance

Table of Contents

Toggle

Carefully Designed Liquidation Operations

This time, a trader transferred a short position worth millions of dollars in JELLY to the Hyperliquid liquidity pool (HLP) through similar operations, which subsequently led to a surge in the token price, resulting in a floating loss exceeding $10 million for the treasury, with the crisis continuing to escalate. According to on-chain data and information compiled by analyst Yuzhu, the process of this incident is 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 as margin to Hyperliquid and opened a short position of 430 million JELLY at an opening price of $0.0095, with a total value of approximately $4.08 million.

Withdrawal of Margin and Forced Liquidation

Only 10 minutes later, at 21:03, the address closed out 30 million JELLY short positions (worth $310,000) at a price of $0.0103 and quickly withdrew $2.76 million in margin. This action led to the remaining 398 million JELLY short positions (worth approximately $4.5 million) being forcibly liquidated due to insufficient margin and were taken over by Hyperliquid’s liquidation address 0x2e3d94f0562703b25c83308a05046ddaf9a8dd14 at a price of $0.0113.

Token Price Surge and Treasury Floating Loss

After the liquidation was completed, the price of JELLY skyrocketed from $0.01 to $0.04, representing an increase of up to 300%. As a result, the 398 million JELLY short positions held by the Hyperliquid liquidity pool incurred substantial floating losses, which have now exceeded $10 million. Analysts suggest that there is a strong possibility that someone was deliberately raising the price of JELLY on centralized exchanges (CEX), forcing the Hyperliquid treasury to liquidate at a high price, further amplifying the losses.

Exchange Squeeze: Hyperliquid Chooses to Close the Market

It is worth noting that many in the market have been calling for centralized exchanges to list JELLY, aiming to trigger a price surge and give Hyperliquid a painful experience. Binance and OKX indeed announced the listing of JELLY contract products in a short period.

In response to the squeeze from centralized exchanges, Hyperliquid immediately announced the delisting of JELLY, eventually settling the short positions taken over at a price of $0.0095 without incurring any losses, although this action may provoke dissatisfaction among users who had gone long on JELLY on Hyperliquid. However, it at least directly addressed the current major crisis.

Meanwhile, Hyperliquid’s official Discord post stated that the foundation would fully compensate users for their losses:

“Upon discovering suspicious market activity, the validators quickly convened and voted to delist JELLY. All user losses, except for 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, with no need to open a support ticket. Robustness and transparency are of utmost importance.”

At the same time, JELLY quickly plummeted due to the loss of incentives and narratives for price pumping.

Where Does Hyperliquid Go from Here?

The Hyperliquid treasury has faced consecutive challenges, raising industry concerns about whether its liquidation mechanism needs adjustment. For traders, such operations may present short-term arbitrage opportunities, but for the platform’s long-term stability, it serves as a wake-up call. How Hyperliquid plans to confront and improve upon these issues merits close attention in future developments.