{"id":20214,"date":"2025-03-27T07:30:53","date_gmt":"2025-03-27T07:30:53","guid":{"rendered":"https:\/\/nft.runfyers.com\/index.php\/2025\/03\/27\/recap-of-the-price-manipulation-in-hyperliquid\/"},"modified":"2025-03-27T07:30:53","modified_gmt":"2025-03-27T07:30:53","slug":"recap-of-the-price-manipulation-in-hyperliquid","status":"publish","type":"post","link":"https:\/\/nft.runfyers.com\/index.php\/2025\/03\/27\/recap-of-the-price-manipulation-in-hyperliquid\/","title":{"rendered":"Recap of the Price Manipulation in Hyperliquid"},"content":{"rendered":"<p><\/p>\n<div>\n<p><span style=\"font-weight: 400;\">In the past 24 hours, Hyperliquid, a well-known derivatives DEX that has recently faced multiple whale attacks, has once again been exploited due to a price manipulation vulnerability involving the JELLY token. This incident not only caused a sharp decline in the total value locked (TVL) in Hyperliquid\u2019s liquidity vault (HLP) but also raised concerns within the Web3 community regarding the exchange\u2019s security and transparency.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Inside_the_Hyperliquid_Price_Manipulation\"\/><strong>Inside the Hyperliquid Price Manipulation<\/strong><span class=\"ez-toc-section-end\"\/><\/h2>\n<h3><strong>Background of the Case<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/nftevening.com\/what-is-hyperliquid\/\" data-wpel-link=\"internal\" target=\"_blank\" rel=\"noopener\">Hyperliquid<\/a> is a decentralized exchange (DEX) specializing in perpetual futures trading. It operates on its own Layer-1 blockchain, HyperEVM, designed for fast and efficient transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hyperliquidity Provider is an internal liquidity vault of Hyperliquid that acts as a market maker and handles liquidations. Users can deposit USDC into HLP to share in its profits or losses. The HLP vault on Hyperliquid is responsible for liquidity management and supporting the system in cases of forced liquidations.<\/span><\/p>\n<div id=\"attachment_149645\" style=\"width: 1034px\" class=\"wp-caption alignnone\"><noscript><\/noscript><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-149645\" class=\"lazyload size-large wp-image-149645\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/vault-1024x576.jpg\" alt=\"Background of the Case\" width=\"1024\" height=\"576\"\/><\/p>\n<p id=\"caption-attachment-149645\" class=\"wp-caption-text\">Source: Medium<\/p>\n<\/div>\n<p><span style=\"font-weight: 400;\">$JELLY is a low-market-cap token, initially ranging from $10-20 million, being listed on Hyperliquid \u2013 newly rumored to list on CEX like Binance or OKX. Due to its small capitalization, it is susceptible to price manipulation.<\/span><\/p>\n<h3><strong>JELLY Price Manipulation from The Whale<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">The event on March 26 began when a whale, using wallet 0xde95, <\/span><a href=\"https:\/\/x.com\/lookonchain\/status\/1904902828319269068\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\"><span style=\"font-weight: 400;\">opened a massive short position<\/span><\/a><span style=\"font-weight: 400;\"> worth approximately $8 million on $JELLY through Hyperliquid. This position, equivalent to 126 million JELLY, was large enough to manipulate JELLY\u2019s market price.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The whale then deliberately removed the margin, eliminating the necessary collateral to maintain the position. This triggered an automatic liquidation, forcing Hyperliquid\u2019s HLP vault to take over the massive short position (forced liquidation).<\/span><\/p>\n<div id=\"attachment_149635\" style=\"width: 1034px\" class=\"wp-caption alignnone\"><noscript><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-149635\" class=\"size-large wp-image-149635\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/hack-1024x600.jpg\" alt=\"JELLY Price Manipulation from The Whale\" width=\"1024\" height=\"600\"\/><\/noscript><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-149635\" class=\"lazyload size-large wp-image-149635\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/hack-1024x600.jpg\" alt=\"JELLY Price Manipulation from The Whale\" width=\"1024\" height=\"600\"\/><\/p>\n<p id=\"caption-attachment-149635\" class=\"wp-caption-text\">Source: Hypurrscan<\/p>\n<\/div>\n<p><span style=\"font-weight: 400;\">Wallet 0xde95 aggressively pumped JELLY\u2019s price on-chain, purchasing a large amount of $JELLY in the spot market to artificially inflate its value. Within less than an hour, JELLY\u2019s market cap surged from $10 million to over $50 million, causing a short squeeze\u2014forcing short positions to close at a loss. As a result, HLP incurred an unrealized loss of up to $12 million. According to analyst Abhi, if JELLY\u2019s market cap were to reach $150 million, Hyperliquid could face complete insolvency.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Amid the chaos, a new wallet (0x20e8) opened a large long position on Hyperliquid and quickly accumulated an unrealized profit of approximately $8.2 million as $JELLY\u2019s price surged.<\/span><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">The crazy squeeze caused Hyperliquidity Provider (HLP) to lose ~$12M in the past 24 hours!<\/p>\n<p>0xde95 shorted <a href=\"https:\/\/twitter.com\/search?q=%24JELLY&amp;src=ctag&amp;ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">$JELLY<\/a> on <a href=\"https:\/\/twitter.com\/HyperliquidX?ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">@HyperliquidX<\/a> and removed the margin, causing HLP to passively liquidate $4.5M short positions.<\/p>\n<p>A newly created wallet \u201c0x20e8\u201d opened a long position on\u2026 <a href=\"https:\/\/t.co\/fagfO1UPJP\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">pic.twitter.com\/fagfO1UPJP<\/a><\/p>\n<p>\u2014 Lookonchain (@lookonchain) <a href=\"https:\/\/twitter.com\/lookonchain\/status\/1904897354274312657?ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">March 26, 2025<\/a><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">Seeing the extreme volatility, centralized exchanges (CEXs) such as <a href=\"https:\/\/nftevening.com\/binance-list-jellyjelly-mavia-perpetual-market\/\" data-wpel-link=\"internal\" target=\"_blank\" rel=\"noopener\">Binance and OKX swiftly listed<\/a> perpetual futures (perps) for $JELLY, further fueling trading activity and price fluctuations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Rumors suggest wallets 0x20E8 and 0x67f were Binance-funded, according to <\/span><a href=\"https:\/\/x.com\/zachxbt\/status\/1904902102079410337\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\"><span style=\"font-weight: 400;\">an investigation by ZachXBT<\/span><\/a><span style=\"font-weight: 400;\">. While unverified, Hyperliquid faces relentless attacks from whales and major CEXs.<\/span><\/p>\n<blockquote>\n<p>Read more: <a href=\"https:\/\/nftevening.com\/centralized-exchanges-intend-to-destroy-hyperliquid\/\" data-wpel-link=\"internal\" target=\"_blank\" rel=\"noopener\">Centralized Exchanges Intend to Destroy Hyperliquid?<\/a><\/p>\n<\/blockquote>\n<h3><strong>Hyperliquid\u2019s Responses Amid the Chaos<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Recognizing the risk, Hyperliquid took decisive action to counter the attack and mitigate potential financial losses. The validator group held an emergency meeting and voted to delist JELLY perps, adjust JELLY\u2019s oracle price to $0.0095 per token, and close all open positions related to $JELLY.<\/span><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Hyperliquid delists <a href=\"https:\/\/twitter.com\/hashtag\/JellyJelly?src=hash&amp;ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">#JellyJelly<\/a> \/ <a href=\"https:\/\/twitter.com\/search?q=%24JELLY&amp;src=ctag&amp;ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">$JELLY<\/a> after Binance and OKX futures listings<\/p>\n<p>What a move <a href=\"https:\/\/t.co\/G4ppft5al6\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">pic.twitter.com\/G4ppft5al6<\/a><\/p>\n<p>\u2014 LANGERIUS (@langeriuseth) <a href=\"https:\/\/twitter.com\/langeriuseth\/status\/1904917280003064180?ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">March 26, 2025<\/a><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">As a result, HLP not only avoided major losses but also secured a net profit of $700K. Hyper Foundation pledged to compensate affected users, excluding wallets involved in the manipulation. However, not everyone is happy with this resolution!<\/span><\/p>\n<div class=\"b-cta-wrapper\">\n<div class=\"b-cta b-cta--stack\">\n<div class=\"b-cta__image\"><a href=\"https:\/\/nftevening.com\/recommends\/hyperliquid\/\" target=\"_blank\" rel=\"noopener noreferrer nofollow\" data-wpel-link=\"internal\"><noscript><img loading=\"lazy\" decoding=\"async\" width=\"225\" height=\"225\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/hyperliquid-logo.png\" class=\"image-fit wp-post-image\" alt=\"hyperliquid logo\"\/><\/noscript><img loading=\"lazy\" decoding=\"async\" width=\"225\" height=\"225\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/hyperliquid-logo.png\" class=\"lazyload image-fit wp-post-image\" alt=\"hyperliquid logo\"\/><\/a><\/div>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"HLP_Vault_and_Price_Manipulation_from_DEX\"\/><strong>HLP Vault and Price Manipulation from DEX?<\/strong><span class=\"ez-toc-section-end\"\/><\/h2>\n<p><span style=\"font-weight: 400;\">After the incident, many praised Hyperliquid for its quick and decisive actions to protect users. However, the exchange\u2019s moves\u2014both delisting JELLYJELLY and adjusting the oracle price to avoid losses\u2014have raised serious questions within the crypto community about the true decentralization of this DEX.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hyperliquid later announced on X that after detecting suspicious trading activity, the validators decided to intervene and voted to delist JELLYJELLY. The exchange defended the validators\u2019 responsibility to intervene for system integrity but acknowledged the need for greater transparency in the voting process.<\/span><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">After evidence of suspicious market activity, the validator set convened and voted to delist JELLY perps.<\/p>\n<p>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<p>\u2014 Hyperliquid (@HyperliquidX) <a href=\"https:\/\/twitter.com\/HyperliquidX\/status\/1904923137684496784?ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">March 26, 2025<\/a><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">Yet, this explanation did not satisfy everyone in the community.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Furthermore, Hyperliquid\u2019s mixed vault mechanism could be a major vulnerability, making it susceptible to well-planned, intentional manipulation by whales. The HLP vault on Hyperliquid is responsible for liquidity management and handling forced liquidations. This is the same mechanism <a href=\"https:\/\/nftevening.com\/behind-the-presence-of-hyperliquid-whale-recently\/\" data-wpel-link=\"internal\" target=\"_blank\" rel=\"noopener\">an anonymous whale exploited<\/a> a week ago by shorting BTC and longing ETH, securing millions in profits.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Gracy Chen, CEO of Bitget, compared Hyperliquid to \u201cFTX 2.0\u201d, criticizing its unprofessional handling of the situation and high-risk financial product design. She argued that the mixed vault structure puts users at a disadvantage, compounded by the lack of KYC\/AML compliance, raising serious regulatory concerns.<\/span><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\"><a href=\"https:\/\/twitter.com\/hashtag\/Hyperliquid?src=hash&amp;ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">#Hyperliquid<\/a> may be on track to become <a href=\"https:\/\/twitter.com\/hashtag\/FTX?src=hash&amp;ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">#FTX<\/a> 2.0.<\/p>\n<p>The way it handled the <a href=\"https:\/\/twitter.com\/search?q=%24JELLY&amp;src=ctag&amp;ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">$JELLY<\/a> incident was immature, unethical, and unprofessional, triggering user losses and casting serious doubts over its integrity. Despite presenting itself as an innovative decentralized exchange with a\u2026<\/p>\n<p>\u2014 Gracy Chen @Bitget (@GracyBitget) <a href=\"https:\/\/twitter.com\/GracyBitget\/status\/1904941729834557453?ref_src=twsrc%5Etfw\" data-wpel-link=\"external\" target=\"_blank\" rel=\"nofollow external noopener noreferrer\">March 26, 2025<\/a><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">The total value of the HLP fund has plummeted from $283 million before the attack to $190 million at the time of writing. Meanwhile, Hyperliquid\u2019s HYPE token\u00a0<a href=\"https:\/\/nftevening.com\/recommends\/binance-trade\/\" target=\"_blank\" rel=\"noopener noreferrer\" class=\"inline-coin\" data-id=\"hyperliquid\" data-wpel-link=\"internal\"><span class=\"inline-coin__symbol\">HYPE<\/span><span class=\"inline-coin__price\"\/><\/a> is down 6%, as the shorting of JELLYJELLY inflicted significant losses on the project.<\/span><\/p>\n<div id=\"attachment_149624\" style=\"width: 1034px\" class=\"wp-caption alignnone\"><noscript><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-149624\" class=\"size-large wp-image-149624\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/Screenshot-2025-03-27-113822-1024x544.png\" alt=\"HLP Vault and Price Manipulation from DEX?\" width=\"1024\" height=\"544\"\/><\/noscript><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-149624\" class=\"lazyload size-large wp-image-149624\" src=\"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/Screenshot-2025-03-27-113822-1024x544.png\" alt=\"HLP Vault and Price Manipulation from DEX?\" width=\"1024\" height=\"544\"\/><\/p>\n<p id=\"caption-attachment-149624\" class=\"wp-caption-text\">Source: Hyperliquid<\/p>\n<\/div>\n<p><span style=\"font-weight: 400;\">After Hyperliquid delisted JELLY from its platform to avoid losses, the community has grown increasingly skeptical about the decentralization of a DEX. This has severely damaged user trust and presents a significant challenge for the project\u2019s builders\u2014balancing true decentralization while preventing manipulative incidents like the recent one. This serves as a harsh lesson for Hyperliquid, highlighting the risks of listing an illiquid token that can have its supply controlled through decentralized exchanges.<\/span><\/p>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\"https:\/\/nftevening.com\/recap-price-manipulation-hyperliquid\/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=recap-price-manipulation-hyperliquid\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the past 24 hours, Hyperliquid, a well-known derivatives DEX that has recently faced multiple whale attacks, has once again been exploited due to a price manipulation vulnerability involving the JELLY token. This incident not only caused a sharp decline in the total value locked (TVL) in Hyperliquid\u2019s liquidity vault (HLP) but also raised concerns [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":20215,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[9],"tags":[21],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/nftevening.com\/wp-content\/uploads\/2025\/03\/Featured-Image-1280x720-PRPartnered-48-1.jpg","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/20214"}],"collection":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/comments?post=20214"}],"version-history":[{"count":0,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/20214\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/media\/20215"}],"wp:attachment":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/media?parent=20214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/categories?post=20214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/tags?post=20214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}