In the aftermath of yesterday’s JELLY incident, HyperLiquid, a leading Decentralized Exchange (DEX), has taken the initiative to provide crucial updates, outlining its key takeaways and planned security enhancements. Despite the dramatic plummet in HYPE’s price yesterday, a gradual stabilization has been observed today.
However, the community remains skeptical about HyperLiquid’s conduct during the crisis. The company was quick to react to non-illegal activities that posed a direct threat to it, yet exhibited a rather passive response to the Bybit hack that occurred in February.
Yesterday, HyperLiquid was thrust into the limelight following a severe controversy. The company made an abrupt decision to delist JELLY after a short squeeze nearly resulted in a devastating loss of $230 million for the firm. This move was met with severe backlash from the community, which was gripped by the fear of witnessing another FTX-style collapse.
Responding to the crisis, HyperLiquid released a statement today: “Yesterday serves as a stark reminder to remain humble, hungry, and laser-focused on what truly matters – building a user-owned, superior financial system. Users holding JELLY long positions at the time of settlement will be compensated by the Foundation. This ensures that all JELLY traders will be settled at a price beneficial to them, barring flagged addresses.”
To prevent a second JELLY squeeze, HyperLiquid has outlined several security measures. These include stricter token delisting protocols and caps on open interest. Of specific note are the significant changes made to its liquidation protocols, introducing multiple safeguards to control the primary source of the turmoil.
However, it remains uncertain whether these measures will be effective in preventing another JELLY-like incident. Nevertheless, the rebound in HYPE’s value today indicates a revival in community sentiment.
HyperLiquid’s handling of the situation has received a fair share of criticism from the crypto community. The primary concern revolves around a fundamental question: Does HyperLiquid truly embody the principles of a decentralized exchange? The move to delist a token and seize investor funds contradicts the core principles of Decentralized Finance (DeFi).
ZachXBT, a well-known crypto analyst, has expressed significant disillusionment with the company’s actions. He had previously identified a potential North Korean security breach, which was denied by the company. HyperLiquid’s swift action to neutralize the JELLY trades, however, has proven that it possesses the capacity for such rapid responses.
ZachXBT stated, “HyperLiquid has recently seen illicit flows [and] said it’s decentralized, so it cannot do anything. Now, HyperLiquid made a centralized decision to quickly close the position at an arbitrary price for an entity using the protocol as intended. If something like that could be done for JELLY, it likely should have been done for both.”
The JELLY incident has given HyperLiquid a crucial opportunity to reflect and revise its strategies. The events of yesterday shook the crypto community, but a major disaster was averted. The community can only hope that the platform will act in good faith to safeguard user funds and uphold its decentralized ethos.
