Unchained
Hyperliquid Saved Itself a $15 Million Loss, but Sparked Criticism - Ep. 807
Mar 28, 2025
Doug Colkitt, Founder and CEO of Ambient Finance, sheds light on the recent whale attack that nearly cost Hyperliquid $15 million. He discusses how a memecoin was leveraged for this high-stakes manipulation. Colkitt navigates the complexities of perpetual swaps, while diving into the controversial decisions made by Hyperliquid that raised eyebrows in the DeFi community. He also tackles the criticism surrounding these actions, potential preventative measures for future attacks, and the implications for decentralized trading practices.
43:37
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Quick takeaways
- Hyperliquid averted a $15 million loss by intervening in a whale attack, prompting debates on DeFi governance and intervention ethics.
- The incident highlighted risks in listing illiquid assets on DEXs, stressing the need for improved risk management practices to safeguard investors.
Deep dives
The Hyperliquid Incident
An unusual manipulation event occurred on Hyperliquid, a decentralized exchange (DEX) that deals with perpetual futures. A whale trader was able to exploit HLP vaults and manipulated the price of a meme coin, Jelly Jelly, by orchestrating large trades that linked the spot and perp markets. This manipulation led the HLP vault to become heavily liquidated, creating substantial paper losses. The price of Jelly Jelly subsequently escalated, causing the HLP vault to face potential liquidation, emphasizing vulnerabilities inherent in liquidity provisioning on DEXs.
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