Gracy Chen, CEO of Crypto-Monnricy Exchange Bitget, criticized hyperliquid management of a March 26 incident on its perpetual exchange, saying that it put the network at the risk of becoming “FTX 2.0”.
On March 26, Hyperliquid, a blockchain network specializing in trading, said that he had struck up perpetual term contracts for the jelly token and would reimburse users after having identified “suspicious market proofs” linked to instruments.
The decision, which was made by consensus among the relatively low number of hyperliquid validators, reported existing concerns concerning the perceived centralization of the popular network.
“Although he presented himself as an innovative decentralized exchange with a daring vision, hyperliquid works more like an offshore [centralized exchange]”Said Chen, after saying” hyperliquid can be on the right track to become FTX 2.0 “.
FTX was an exchange of cryptocurrency managed by Sam Bankman Fried, who was found guilty of fraud in the United States after the brutal collapse of the FTX in 2022.
Chen did not corne the hyperliquid of specific legal offenses, rather stressing what it considered as an “immature, contrary to ethics and non -professional” of hyperliquid to the event.
“The decision to close the jelly market and force the settlement of posts at a favorable price establishes a dangerous precedent,” said Chen. “Confidence – not capital – is the basis of any exchange […] And once lost, it is almost impossible to recover. »»
Source: Gracy Chen
In relation: The hyperliquid sticked up perpial jelly, citing a “suspect” activity
Jelly incident
The Jelly token was launched in January by the co-founder of Venmo, Iqram Magdon-Ismail, as part of a web 3 social media project nicknamed Jellyjelly.
He initially reached a market capitalization of approximately $ 250 million before falling to millions to a figure in the weeks that followed, according to Dexscreener.
On March 26, Jelly’s market capitalization climbed to around $ 25 million after Binance, the most popular cryptography exchange in the world, launched its own perpetual future linked to the token.
On the same day, a hyperliquid trader “opened a short position of $ 6 million on Jellyjelly”, then “deliberately self-liquidated by pumping the chain Jellyjelly Prix,” said Abhi, founder of the collective web3 company, in a post.
Bitmex founder Arthur Hayes said that the initial reactions to the hyperliquid jelly have overestimated the potential reputation risks of the network.
“Let us stop claiming that the hyperliquid is decentralized. And then stop pretending to make traders actually [care]”Said Hayes in a post [it] Started in a short time, because Degens will disgust.
Binance launched Jelly Perps on March 26. Source: Binance
Growing pain
On March 12, the hyperliquide struck a similar crisis caused by a whale that intentionally liquidated a position of around 200 million dollars in ether (ETH).
Commercial cost depositors in the hyperliquidal liquidity pool, HLP, approximately $ 4 million losses after forcing the pool to relax trade at unfavorable prices. Since then, the hyperliquid has increased the collateral requirements for open positions in order to “reduce the systemic impact of large positions with a hypothetical impact on the market on closing”.
Hyperliquid uses the most popular perpetual trading platform for the most popular lever, controlling around 70% of the market share, according to a January report by the asset manager Vaneck.
Perpetual, or “PERPS” term contracts are leveraging contracts without expiration date. Traders deposit margin guarantees, such as the USDC, to secure open positions.
According to L2Beat, the hyperliquid has two sets of main validators, each comprising four validators. In comparison, rival chains such as Solana and Ethereum are supported respectively by around 1,000 and 1 million validators.
More validators generally reduce the risk of a small group of initiates handling a blockchain.
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