HyperLiquid has announced a series of risk management improvements following a major incident involving its Hyperliquidity Provider (HLP) vault.<\/p>\n
As part of its response, HyperLiquid\u2019s 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.<\/p>\n
The decision follows the delisting of JELLY perpetual contracts after validators identified suspicious market activity.<\/p>\n
The incident stemmed<\/a> from a trader allegedly manipulating the price of JELLY, leading to significant unrealized losses for HLP, a market-making vault within HyperLiquid.<\/p>\n The trader, who held $4.85 million worth of JELLY, combined a short position on HyperLiquid with on-chain spot buys, which triggered a liquidation event that transferred the short position to HLP. As the trader aggressively purchased JELLY on decentralized exchanges, its price surged, which temporarily caused HLP\u2019s unrealized losses to reach $13.5 million.<\/p>\n 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.<\/p>\n This decision sparked discussions within the crypto community, with some experts questioning<\/a> its legality.<\/p>\n Meanwhile, Bitget CEO Gracy Chen criticized<\/a> HyperLiquid\u2019s handling of the JELLY delisting and warned it could follow the path of FTX. The exec argued that the decision, made by a small group of validators, raised concerns about decentralization.<\/p>\n Chen also highlighted structural flaws, such as mixed vault risks and a lack of transparency. Her concerns were echoed by BitMEX co-founder Arthur Hayes, who also questioned HyperLiquid\u2019s decentralization claims.<\/p>\n In light of these events, HyperLiquid has announced<\/a> several key changes to its risk management systems.<\/p>\n First, the Liquidator vault within HLP will have stricter limits, meaning it will hold a smaller portion of the total HLP account value. It will also be rebalanced less often, and a more advanced system will be used to handle liquidations.<\/p>\n Second, the automatic deleveraging (ADL) process will only activate if the Liquidator vault\u2019s losses exceed a certain limit. This will help prevent funds from being automatically moved from other vaults to cover losses.<\/p>\n Third, the platform will adjust open interest (OI) caps more dynamically based on market size to ensure they better reflect current conditions. Lastly, an on-chain voting system will allow validators to decide whether to remove assets that fall below certain thresholds.<\/p>\n \u201cYesterday is a good reminder to stay humble, hungry, and focused on what matters: building a better financial system owned by the people. Hyperliquid is not perfect, but it will continue to iterate and grow through the collective efforts of builders, traders, and supporters.\u201d<\/p>\n The post Hyperliquid Announces Key Risk Management Updates Following JELLY Market Incident<\/a> appeared first on CryptoPotato<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" HyperLiquid has announced a series of risk management improvements following a major incident involving its Hyperliquidity Provider (HLP) vault. As part of its response, HyperLiquid\u2019s 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, […]<\/p>\n","protected":false},"author":0,"featured_media":55360,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-55359","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/55359"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=55359"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/55359\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/55360"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=55359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=55359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=55359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}HyperLiquid\u2019s Risk Management Updates<\/h2>\n