Hyperliquid Saved Itself a $15 Million Loss, but Sparked Criticism - Ep. 807
A whale attacked decentralized perpetuals exchange Hyperliquid with a manipulation of the $JELLY memecoin. Was its response hypocritical or a necessarily evil?
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Show Notes
Perpetual swap DEX Hyperliquid suffered a whale attack and was on the brink of losing $15 million. It promptly responded in a way that generated a fair amount of controversy.
The founder and CEO of Ambient Finance Doug Colkitt joined the show to explain:
- How perp swaps work
- How a whale used the low-liquidity memecoin $JELLY to attack Hyperliquid’s vault
- How Hyperliquid’s response broke DeFi taboos around decentralization, oracles, etc.
- Criticisms of and justifications for the team’s decisions
- What can be done to prevent similar attacks in the future
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Guest
- Doug Colkitt, Founder and CEO of Ambient Finance
Links
- Accounts of the $JELLY whale attack on Hyperliquid and its response
- X: The story
- X: Nuking the vault
- X: How Hyperliquid responded
- Arguments for and against Hyperliquid’s solution:
- ZachXBT: ZachXBT calls out alleged hypocrisy
- Jordi Alexander: Shorting on a perp is not robust
- Jose Maria Macedo: How do they override the oracle price?
- Doug: Closing positions at an arbitrary price
- Gracy Chen: Casting doubts on integrity
- Steven.hl: In defense of HL
- Kam: Of course quorum was reached easily
- What precedent Hyperliquid’s actions set
- Kevin Zhou: Binance and OKX set a precedent
Timestamps:
👋 0:00 Intro
🤔 02:59 What is Hyperliquid?
🐳 05:16 How a whale used $JELLY to attack
⛔ 09:19 How Hyperliquid responded
📈 11:59 Why did Binance and OKX suddenly list the memecoin?
🤔 16:32 How did Hyperliquid ‘change the rules’ to protect themselves?
⚖️ 19:25 ‘Losses for thee, but not for me’: Hyperliquid’s hypocrisy?
💡 24:39 Doug’s ‘cleaner’ solution
👀 28:35 Will this have positive or negative knock-on effects?
🧹 31:20 Tidying up illiquid markets
📰 32:46 Crypto News Recap
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