《The Reform of Hyperliquid》

The price of Hyperliquid has tripled from its bottom.

In March, Hyperliquid experienced a short squeeze event with the JELLY memecoin, and HLP faced over 10 million dollars in unrealized losses.

Hyperliquid has emerged from the HLP squeeze, effectively curtailing the risk of HLP being drained.

On April 10, HLP began to recover, coinciding with a rise in coin prices. However, throughout this process, trading volume did not show a significant increase.

The core question is, how has Hyperliquid reformed the HLP mechanism?

Limiting the capital allocation for liquidation strategies: The proportion of funds allocated for liquidation strategies using HLP has been set with a fixed and clear upper limit, reducing potential losses in significant liquidation events. The frequency of rebalancing liquidation funds has also been decreased to further limit risk.

Introducing an Automatic Deleveraging (ADL) mechanism: When the losses from liquidation strategies exceed a specific threshold, HLP will trigger automatic deleveraging (ADL). This mechanism compensates for losses by utilizing the unrealized profits of other traders in the same asset, thereby protecting the overall funding pool of HLP.

Dynamic Open Interest (OI) limits: To prevent low market cap tokens (like JELLY) from being manipulated, Hyperliquid has introduced dynamic open interest limits for assets supported by HLP, especially for tokens with lower liquidity, to reduce the occurrence of similar events.

Next, the focus will be on the progress of HyperEVM. Upon initial observation, it seems that there are no surprising advancements, and a closer look is needed.