HyperLiquid faced a ‘tough situation’: Blockworks Research

Blockworks Research analyst Boccaccio explains the HyperLiquid controversy and why they need to adjust risk and margin

article-image

Blockworks Research Analyst Boccaccio | DAS 2025 New York by Mike Lawrence for Blockworks

share

This is a segment from the Empire newsletter. To read full editions, subscribe.


Let’s talk about HyperLiquid. 

To recap: A trader took out a relatively large short position on JELLY, then, when the short position was liquidated, HyperLiquid’s vault, HLP, took on the position to wind it down. That’s according to Blockworks Research Analyst Boccaccio.

However, JELLY kept rising, which led to the HLP taking losses, so the team overrode the oracle price — a controversial move — and closed the position. 

The choice to shut the position was perhaps a wise one, despite the controversy. Because then both OKX and Binance listed JELLY futures — a move that Boccaccio called “shady.” While we don’t know exactly what the motives were to list the futures, it was clear that HyperLiquid was struggling at the time, and this context “made it seem like an attack on HyperLiquid.”

“Notably, HyperLiquid is the only DEX that has been able to compete with CEX volumes,” Boccaccio told me. 

Loading Tweet..

We’re not going to get too into the weeds about the DEX vs. CEX debate or some of the other controversy that’s arisen since, though I know my colleagues at 0xResearch have been closely following this. 

However, the nuance of the situation is pretty important.

“All positions on Hyperliquid are onchain (unlike some other DEXs). The oracle price being overriden was decided by the validator set. This was clearly a nuanced situation, so the team had to take some serious, and potentially controversial action (even though it was decided by the validator),” Boccaccio noted.

“It’s a tough situation: Either let people lose money in the HLP and erode confidence, or close somebody’s position by overriding the oracle price. I think, to an extent, you want your money in a semi-controlled environment, where there aren’t nefarious actors taking advantage of the situation at the expense of your funds/users.”

So, HyperLiquid and HLP will need to adjust both the risk and margin moving forward to try to prevent another similar situation, Boccaccio said. 

But is it anything like what happened at FTX, like BitGet’s Gracy Chen tried to claim? Let’s not kid ourselves.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (19).png

Research

Suilend has grown into the top money market and liquid staking provider on Sui. STEAMM, Suilend’s Superfluid AMM, presents a compelling avenue for growing market share within Sui’s DEX landscape and revenue generation for the protocol. Suilend’s multi-product suite position it well for owning market share across key verticals. While current metrics across the Sui ecosystem are likely inflated due to Sui Foundation incentive programs, SEND trades at amongst the lowest multiples in the lend/borrow sector, suggesting that a bull case for continued growth in the ecosystem may be mispriced.

article-image

The stablecoin issuer now plans to offer 32 million Class A common stock shares at a price of up to $28 each

article-image

Let’s go whale watching, Bitcoin style: Investigating the mysterious “12ib7” wallet now worth $3.2 billion

article-image

Bitget’s L2 is undergoing a leadership change and will be helmed by Colin Goltra, formerly the blockchain’s chief growth officer

article-image

The funding was spread out across 61 rounds, a slight dip in both number of rounds and total funding in comparison to other months

article-image

Why is it controversial to say things are better than they used to be?

article-image

Wallchain could make influencer ROI more measurable for Solana businesses