Update on the HyperLiquid and $JELLY drama: - Validators Voted to Delist $JELLY from Hyperliquid. - Hyperliquid Foundation triggered Auto-Deleveraging: This is Hyperliquid’s last-resort safety mechanism. They closed all remaining $JELLY positions at a fixed “settlement price” ($0.0095) to prevent the platform from going insolvent. A lot of people are saying, Hyperliquid committed crime by unfairly closing the position at $0.0095 when the oracle price showed something else. This is up for debate imo. - How Auto-Deleveraging Worked*: - All open $JELLY positions (both longs and shorts) were forcibly closed at $0.0095, the last fair price according to hyperliquid, before delisting. - Since HLP was short $JELLY, closing at this **lower price** meant HLP *bought back* JELLY cheaply, turning a loss into a $703k profit. --- The Hyper Foundation will automatically refund losses/make the users whole (except the attacker’s flagged wallets). No action is needed from users. this will be handled on-chain.
Here's everything you need to know about the $JELLY attack on Hyperliquid. Step 1: Shorting Futures + Spot Buying - The attacker (**`0xde95`**) opened a large short position on $JELLY perpetual futures (betting the price would drop). - Simultaneously, they bought $JELLY spot (actual tokens) on-chain to artificially inflate the spot price. Step 2: Self-Liquidation - The attacker **removed margin** from their short position, intentionally triggering a **self-liquidation**. - Since HLP acts as the counterparty during liquidations, it inherited the attacker’s massive short position (~$4.5M). Step 3: Pumping the Price Further - The attacker continued buying $JELLY spot, driving the price even higher. This caused: - HLP’s inherited short position to lose value (short positions lose money when prices rise). - A parallel **long position** opened by the attacker’s second wallet (**`0x20e8`**) to gain massive unrealized profits (~$8.2M). Step 4: Exploiting Illiquidity - $JELLY’s low liquidity amplified the price impact. Small on-chain buys caused disproportionate price spikes, making HLP a huge a** loss. - HLP’s losses snowballed to over $10M as $JELLY’s price kept rising.
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