The DCo Podcast Markets, Manipulation & the Myth of Decentralisation with Jose Sanchez
Apr 8, 2025
Jose Sanchez, an investor and researcher at Spartan, dives into the mechanics of crypto markets. He discusses the Hyperliquid-JELLY saga and how on-chain liquidity risks can lead to manipulation. The conversation covers the evolution of intents and solvers, as well as Ethereum's fragmentation issues. Jose also shares insights on the shift towards fundamental investment strategies and highlights key protocols like Hyperlane and Pendle that are shaping the landscape. It's an engaging look at the future of decentralized finance.
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Hyperliquid–JELLY Market Maneuver
- Jose Sanchez recounts the Hyperliquid–JELLY episode where a wallet amassed open interest and forced liquidations.
- The event exposed how low on-chain liquidity and leverage settings can enable market manipulation.
Change Leverage As Liquidity Falls
- Adjust leverage dynamically when an asset's market cap and on-chain liquidity collapse.
- Limit allowable leverage for tokens that drop dramatically to reduce manipulability and counterparty risk.
Decentralisation Is A Spectrum
- Jose argues that centralised interventions in crises mirror past blockchain rollbacks like The DAO split.
- He frames decentralisation as a spectrum where projects initially act centralized to survive major incidents.