In simple terms, Hyperliquid's Jelly incident was a 'big drama' in the crypto space, somewhat resembling an intentional market disruption, with the platform forced to clean up the mess in the end. Let's discuss what happened:
1. Introduction: This small coin, Jelly, was played up.
Hyperliquid is a pretty impressive decentralized trading platform, focusing on perpetual contracts, with fast speeds and low fees. Jelly, on the other hand, is an inconspicuous meme coin on Solana, with a small market cap and low trading volume. At the beginning of 2025, Hyperliquid saw the community's interest in launching this coin, so it listed Jelly's perpetual contracts with a 3x leverage. However, the price of this asset relied on on-chain automated market makers (AMM), which is somewhat unreliable.
On March 26, a big player opened a short position of 5 to 6 million dollars in Jelly on Hyperliquid, which was extremely aggressive. Not long after, Jelly's price skyrocketed like a rocket, surging 230% in an hour, jumping from the bottom to around 0.16 dollars. This kind of increase clearly seems abnormal; it's likely that someone was manipulating things behind the scenes.
2. Development: The platform was nearly blown up.
Hyperliquid's rule is that when the price fluctuates to the liquidation line, positions automatically get liquidated, and the unliquidated portion is handed over to the platform's treasury (HLP). This time, that big player's short position got liquidated, and the treasury took on 398 million Jelly contracts. As a result, Jelly's price surged, leading to a reported loss of over 13 million dollars in the treasury (some sources mention just over 10 million, depending on the data). What’s even more alarming is that some calculated that if Jelly rose to 0.17 dollars, the treasury's 240 million dollars could be at risk.
At this point, everyone panicked, suspecting someone was deliberately 'targeting' Hyperliquid. It’s possible that this big player was pulling up Jelly’s price in the spot market while waiting for Hyperliquid to blow up and suffer losses.
3. Climax: Binance's involvement led to rampant conspiracy theories.
Coincidentally, at this time, Binance Futures announced plans to launch Jelly contracts. People in the community immediately exploded, saying Binance wanted to take a shot at Hyperliquid. After all, Hyperliquid has been strong in recent years, stealing quite a bit of business from centralized exchanges. Some even dug up a reply from Binance's CEO He Yi on X, where she acknowledged the suggestion to 'use Jelly against Hyperliquid,' making things even more lively, reminiscent of Binance's past actions against FTX. But this is merely speculation, without concrete evidence.
4. Hyperliquid's firm stance: Decisively cut losses.
Seeing this situation, Hyperliquid quickly took action. On March 26, they issued an announcement:
- Delist Jelly contracts: A meeting was held, and a vote was taken to directly eliminate this asset to avoid further trouble.
- Compensation to users: Apart from a few suspicious accounts, the foundation compensated everyone else who was affected, with funds automatically credited without needing to apply.
- Reassuring users: They stated that the treasury actually made 700,000 USDC in the past 24 hours, proving they still had resources.
This wave of operations was quite smooth, and the community's anger subsided a bit. Later, OKX and Binance also mentioned wanting to list Jelly, but Hyperliquid had already distanced itself from the mess.
5. Result: A bit hurt but not down.
- Jelly: The price rose a bit and then fell back down, increasing by about 146% on the same day.
- HYPE: Hyperliquid's own coin dropped by 20%, falling from 16 dollars to 13 dollars, causing significant market fear.
- Treasury: Funds have dropped from the peak, now remaining at around 258 million dollars.
6. How to view this incident.
This Jelly incident feels like someone used a small coin to create a big pit, almost dragging Hyperliquid down with it. Binance jumped in to stir the pot, making it seem like there was some kind of grudge involved. Hyperliquid reacted quickly, handling losses and delisting to stabilize things. However, this situation also exposed issues: such small coins with high leverage put a strain on the platform's mechanisms, and it needs to be thought through carefully for improvements. Otherwise, if another wave hits, it might not end well.
