Decentralized Exchange Hyperliquid’s Vault (HLP) Suffers Over $10 Million in Floating Losses
After being recently impacted by the “Hyperliquid 50x Leverage Whale” with a forced liquidation, last night (26), another trader similarly executed a forced liquidation by withdrawing margin, utilizing the meme coin $JELLYJELLY, resulting in Hyperliquid incurring over $10 million in floating losses.
(Background: Earning $22 million, the Sinister 50x Leverage Whale’s Record of Slaughter on HyperLiquid)
(Supplementary Background: A 50x Long ETH Whale “Profited $2 million from Liquidation!” What Happened When One Person Took Down Hyperliquid Leaving a Huge Debt?)
Incident Overview
The “Hyperliquid 50x Leverage Whale,” which previously gained massive profits through high-leverage operations on the decentralized exchange Hyperliquid, had executed a forced liquidation, leaving Hyperliquid’s vault (HLP) with a lot of bad debt after earning nearly $2 million in profit.
On the night of the 26th, possibly seeing the profitability of the “Hyperliquid 50x Leverage Whale’s” strategy to exploit Hyperliquid’s vault, a trader with the wallet address 0xde9…c91 similarly executed a forced liquidation by withdrawing margin and utilizing the meme coin $JELLYJELLY, causing Hyperliquid to suffer over $10 million in floating losses.
Details of the Incident
According to on-chain data analyst Ai Yi’s review last night, the specific actions of the $JELLYJELLY trader were as follows:
- Due to the relatively weaker liquidity of $JELLYJELLY compared to the ETH chosen by the “Hyperliquid 50x Leverage Whale,” the price was more easily manipulable and was selected by this whale;
- Opened a short position on $JELLYJELLY worth $4.08 million, with an average price of $0.0095 and a margin of $3.5 million;
- Executed a forced liquidation: Another address Hc8gN…WRcwq collaborated with market selling after the short position opened to push down the coin price, creating floating profit for the short position, while the short position address withdrew $2.76 million in margin, allowing Hyperliquid’s vault to take over the position;
- Subsequently began to buy $JELLYJELLY intensively, driving up the coin price, causing Hyperliquid’s vault to continuously incur floating losses, which at one point exceeded $10 million.
Ai Yi pointed out that the consequence of this action was that as long as $JELLYJELLY did not drop, retail investors in Hyperliquid’s vault would withdraw their funds, and the more funds withdrawn, the lower the liquidation price would be, leading to a bank run in the vault, ultimately causing the vault to be forcibly liquidated due to insufficient margin. (On-chain data last night indeed showed that retail investors were withdrawing funds, but whales had not yet made significant moves.)
Binance and OKX Listed $JELLYJELLY Contracts
The worst-case scenario last night was that if the price of $JELLYJELLY continued to rise, ultimately reaching around $0.17, Hyperliquid’s vault would face losses of up to $240 million.
More dramatically, when community members joked that if there were any positive news for $JELLYJELLY released at that moment, the price would inevitably surge, ultimately leading to Hyperliquid’s vault being completely liquidated — it was at this moment that exchanges Binance and OKX quickly listed $JELLYJELLY for contract trading, rapidly stimulating the price increase, seemingly cornering Hyperliquid.
Goodness, Binance really took action!
Listing the $jellyjelly contract, the price briefly surged to $0.0661 @KeBim3LiVC
Hyperliquid Delisted $JELLYJELLY
Amidst the attention from the entire network, Hyperliquid did not allow the community to witness the farce of its vault’s bankruptcy but instead chose to delist the $JELLYJELLY trading pair and settled the positions at a price below the current price of $0.0095, incurring no losses.
Although Hyperliquid’s final action effectively halted the risk of retail funds fleeing, it also drew criticism from some in the community, as Hype’s forced intervention established a liquidation price, directly delisting the token, transforming a decentralized exchange into a centralized one instantaneously…
BWENEWS: Hyperliquid delisted $JELLYJELLY and settled the position at a favorable price ($0.0095) without losing any money – SigmaSquerd
Formula News: Hyperliquid delisted $JELLYJELLY and settled at a favorable price ($0.0095) without losing any funds – SigmaSquerd @QjCdR7bx4m
Community Reaction
In response, community member @_FORAB summarized the event as a hunt for Hyperliquid by all:
- Simply explaining what happened with Hype:
- Two accounts, one shorting and one going long;
- Spot market continuously pushing up the price, forcing the short position;
- Massive short position taken over by Hype;
- All longs became Hype’s opponents;
- Continuously pushing the price up, allowing longs to profit, while Hype suffered massive losses;
- Ultimately closing the long positions for profit and then selling the spot.
This can be understood as everyone hunting together in the casino, trying to make Hype go bankrupt.
The core of this incident is that after Hyperliquid closed positions and delisted $JELLYJELLY, the price significantly plummeted.
Subsequent Comments from Industry Leaders
Following this, several industry leaders commented on Hyperliquid’s “price manipulation” and forced liquidation of JELLY short positions facing backlash. Arthur Hayes stated that he bets $HYPE will drop back to the starting point.
Related Reports
Unveiling the True Identity of Hyperliquid’s 50x Whale: Is the X Account Renamed MELANIA Connected to Trump? ZachXBT Predicts Criminal Evidence Will Be Exposed Today.
Earning $22 million, the Sinister 50x Leverage Whale’s Record of Slaughter on HyperLiquid.
Hyperliquid Whale Liquidation Storm: Bybit CEO Highlights High Leverage Risks of DEX, Calls for Introduction of CEX Risk Control Mechanisms.