The post Hyperliquid Faces FTX 2.0 Fears After JELLY Token Crash and Liquidation Blunder appeared on BitcoinEthereumNews.com.

The crypto derivatives platform Hyperliquid is stepping up its risk management after a major liquidation event involving the JELLY token. To prevent losses for affected traders, the platform has confirmed that users who held long JELLY positions at settlement will be compensated $0.037555. However, flagged accounts will not be eligible for this refund. Hyperliquid: For users holding long JELLY positions at settlement, the Foundation will compensate them at a price of 0.037555. Hyperliquid will strengthen risk management: HLP will set limits on the Liquidator vault; if losses exceed the limit, ADL will be triggered; the open… — Wu Blockchain (@WuBlockchain) March 28, 2025 What triggered the Hyperliquid liquidation incident involving the JELLY token? The issue started when a trader executed a self-trade of 4 million USDC in JELLY at a low price of $0.0095. This move caused JELLY’s price to surge more than four times, leading Hyperliquid’s backstop protection system (HLP) to step in and liquidate the position. However, this liquidation ended up causing losses to HLP’s account value. Although Hyperliquid had restrictions in place to prevent excessive open interest, the problem arose when HLP took control of the position. Instead of triggering automatic deleveraging (ADL) to manage the risk, the system continued operating as usual because it shared collateral across multiple vaults. This flaw exposed HLP to unexpected losses. Bitget CEO Gracy Chen criticized Hyperliquid’s handling of the March 26 incident, warning that its approach to risk management could turn it into “FTX 2.0.” She raised concerns over how the platform managed the liquidation event, suggesting it posed serious risks to the exchange’s stability. What changes is Hyperliquid making after the March 26 JELLY incident? Yesterday is a good reminder to stay humble, hungry, and focused on what matters: building a better financial system owned by the people. Hyperliquid…

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Filed under: News - @ March 28, 2025 6:25 am