Stop pretending to be decentralized, and stop pretending that traders really care about this.
After experiencing the "Hyperliquid 50x leverage whale" long position cash-out event (related content can be found in: Why did the Hyperliquid whale self-liquidate? Who bears the millions of dollars in losses?), Hyperliquid encountered a similar crisis again last night. This time, the sniper's target was more precise, choosing the smaller market cap, more easily manipulated altcoin JELLY as the breakthrough point.
In a short time, JELLY's price fluctuated dramatically, with the 15-minute K-line showing potential gains over 100% and drops over 50%, throwing the market into extreme conditions, with short-term traders exclaiming "nerves clashing, retail investors will be liquidated in minutes". How did this hunting operation unfold? Odaily will provide a comprehensive review of the entire event.
Event Overview: Hyperliquid Treasury Takes Over JELLY Short Position, from Near Liquidation to "Forced" Lossless Closure
A Trader Opens Massive JELLY Short Position
At 8:53 PM yesterday, a trader transferred 3.5 million USDC as margin and opened a 430 million JELLY short position (worth approximately $4.08 million) on the Hyperliquid platform at a price of $0.0095.
[The rest of the translation follows the same professional and accurate approach, maintaining the original structure and meaning while translating to English.]Andre Cronje: Position Size Is Not a Fixed Function of Leverage, DeFi Should Not Have Fixed Leverage
Regarding the Hyperliquid vault facing liquidation and loss, Sonic Labs co-founder Andre Cronje posted on X platform: Position size is not a fixed function of leverage, but depends on available liquidity and realized volatility. Small positions can have 1000x leverage, while large positions may only have 1.2x leverage. In DeFi, there cannot be fixed values.
CZ Cites Old Post Stating DEX Is Not as Good as CEX, Emphasizes No Relation to Hyperliquid Liquidation Event
Additionally, CZ cited a previous tweet on X platform: "I know I'm not smart. When I don't understand something, I admit it, and I often think that those who are capable must have some secret I don't know that allows them to do things I can't. But occasionally, I discover that the most basic rules still apply." Notably, CZ specifically explained that to avoid confusion, this tweet is unrelated to today's Hyperliquid liquidation event, but rather from his previous experience with AstherusHub on the BSC chain, which is a project in Labs' investment portfolio. They do not show forced liquidation prices and use an automatic deleveraging mechanism (ADL), so they would not encounter similar issues today.
Impact on Hyperliquid: Significant TVL Decline, Clear USDC Outflow Trend
Hours after the incident, while the waves seem to have calmed on the surface, its impact on Hyperliquid remains deep and "heavy". According to Hyperliquid's official website, HLP's TVL was as high as $240 million before the event, but has now significantly dropped to $195 million, losing nearly 20% of funds in a short time. This dramatic fluctuation reflects the market's shaken trust in the platform, and investor confidence has clearly not yet recovered.
Moreover, according to defillama data, after the Hyperliquid liquidation event, USDC funds on the platform experienced a massive outflow, with a net outflow of $175 million. Total USDC holdings plummeted from $2.217 billion before the event to $2.004 billion.
Summary
This hunt for Hyperliquid has completely exposed the governance and transparency issues of decentralized perpetual contract exchanges under the spotlight. Although the official reason given was validator voting to delist trading pairs, ultimately "pulling the plug" and forcibly settling accounts has made many question how decentralized DeFi exchanges really are.
This event also reminds all DeFi projects that merely having a "decentralization" label is far from enough. When facing extreme market conditions, whether the platform can stabilize the situation while maintaining fairness and transparency is key. In the future, for decentralized on-chain DeFi projects to win market trust, they must find a better balance between transparency, governance mechanisms, and risk control, otherwise similar crises may not be the last.
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