tl;dr
HyperLiquid has announced risk management improvements after an incident involving its Hyperliquidity Provider (HLP) vault. The Foundation will refund JELLY long position holders at a closing price of $0.037555. This follows the delisting of JELLY perpetual contracts due to suspicious market activit...
HyperLiquid has announced risk management improvements after an incident involving its Hyperliquidity Provider (HLP) vault. The Foundation will refund JELLY long position holders at a closing price of $0.037555. This follows the delisting of JELLY perpetual contracts due to suspicious market activity.
A trader's alleged price manipulation caused significant unrealized losses for HyperLiquid. HyperLiquid force-closed the JELLY market and settled at $0.0095, sparking community discussions. HyperLiquid has since announced risk management updates, including stricter limits for the Liquidator vault and an on-chain voting system for asset removal.
Responding to the incident, HyperLiquid’s Foundation will refund users who held JELLY long positions at the time of settlement, using a closing price of $0.037555. This move is expected to ensure that all JELLY traders, except those with flagged addresses, receive a settlement price that is beneficial to them. The decision follows the delisting of JELLY perpetual contracts after validators identified suspicious market activity.
The incident stemmed from a trader allegedly manipulating the price of JELLY, leading to significant unrealized losses for HLP. As the trader aggressively purchased JELLY on decentralized exchanges, its price surged, which temporarily caused HLP’s unrealized losses to reach $13.5 million. With liquidity on decentralized exchanges being relatively low, the price movement was more pronounced.
In response, HyperLiquid force-closed the JELLY market and settled it at $0.0095, which is much lower than the $0.50 price reported by decentralized exchange oracles. This decision sparked discussions within the crypto community, with some experts questioning its legality.
HyperLiquid has announced several key changes to its risk management systems, including stricter limits for the Liquidator vault, adjusting open interest (OI) caps more dynamically based on market size, and implementing an on-chain voting system to allow validators to decide whether to remove assets that fall below certain thresholds.
What are your thoughts on the recent risk management improvements announced by HyperLiquid? How do you perceive the impact of these changes on the cryptocurrency community?