➤The "Hunting Hyperliquid" incident that occurred yesterday morning involved the Jelly Jelly meme coin, revealing the complex game between DEX and CEX, as well as potential vulnerabilities in the DeFi ecosystem.
1) The attacker opened a short position on Jelly Jelly on Hyperliquid while simultaneously selling a large amount of spot through another address to drive down the price, thereby allowing the short position to gain unrealized profits.
Subsequently, the attacker withdrew the margin, triggering a liquidation, and transferred the position to be taken over by Hyperliquid's treasury (HLP).
After HLP took over the short position, the attacker began to push up the price of Jelly Jelly, attempting to force HLP's short position to get liquidated to exhaust the treasury's funds.
2) HLP is similar to GMX's GLP and is a liquidity pool on the Hyperliquid platform, composed of funds deposited by users. If the price of Jelly Jelly continues to rise, the losses on HLP's short position will expand, potentially leading to full compensation by the treasury.
3) Binance and OKX quickly launched perpetual contracts for Jelly Jelly, further raising price expectations and intensifying pressure on HLP. He Yi even posted, "Okay, got it," possibly considering launching the spot.
➤Hyperliquid urgently delisted Jelly Jelly and settled the short position at a discounted price of $0.0095.
As a decentralized exchange, Hyperliquid responded to the crisis by artificially delisting the token. In such an extreme situation, there really was no better way than to delist the project.
As for DEX, it is willing to see a leading DEX like Hyperliquid fail; after all, it's a business war. The flow of traffic is shifting from CEX to DEX, and launching the Jelly Jelly contract is viewed as a business strategy to take advantage of the situation.
The price of Hyperliquid's native token HYPE has dropped significantly.
> How to put it, this incident has once again exposed the facade of decentralization. The so-called DEX can also be operated centrally and can be decided by a small group of people.
> DeFi projects are also so-called governance tokens, where everyone votes using governance tokens. But it has been observed that DeFi projects are basically decided by a small circle of people, revealing a false model of decentralization.
> There is never a true form of decentralization between centralization and decentralization. Even the spirit promoted by the crypto market is merely a slogan and cannot truly materialize.
