Gracy Chen, CEO of cryptocurrency exchange Bitget, slammed Hyperliquid’s handling of a March 26 event on its continuous exchange, stating it put the network at threat of ending up being “FTX 2.0.”
On March 26, Hyperliquid, a blockchain network concentrating on trading, stated it delisted continuous futures agreements for the JELLY token and would compensate users after recognizing “proof of suspicious market activity” connected to the instruments.
The choice, which was reached by agreement amongst Hyperliquid’s fairly little number of validators, flagged existing issues about the popular network’s viewed centralization.
” Regardless of emerging as an ingenious decentralized exchange with a vibrant vision, Hyperliquid runs more like an overseas [centralized exchange],” Chen stated, after stating “Hyperliquid might be on track to end up being FTX 2.0.”
FTX was a cryptocurrency exchange run by Sam Bankman-Fried, who was founded guilty of scams in the United States after FTX’s abrupt collapse in 2022.
Chen did not implicate Hyperliquid of particular legal violations, rather stressing what she thought about to be Hyperliquid’s “immature, dishonest, and less than professional” action to the occasion.
” The choice to close the $JELLY market and force settlement of positions at a beneficial cost sets a hazardous precedent,” Chen stated. “Trust– not capital– is the structure of any exchange […] and when lost, it’s nearly difficult to recuperate.”
Source: Gracy Chen
Related: Hyperliquid delists JELLY perps, pointing out ‘suspicious’ activity
JELLY event
The JELLY token was introduced in January by Venmo co-founder Iqram Magdon-Ismail as part of a Web3 social networks task called JellyJelly.
It at first reached a market capitalization of approximately $250 million before being up to the single digit millions in the taking place weeks, according to DexScreener.
On March 26, JELLY’s market cap skyrocketed to around $25 million after Binance, the world’s most popular crypto exchange, introduced its own continuous futures connected to the token.
The very same day, a Hyperliquid trader “opened a huge $6M brief position on JellyJelly” and after that “intentionally self-liquidated by pumping JellyJelly’s cost on-chain,” Abhi, creator of Web3 business AP Collective, stated in an X post.
BitMEX creator Arthur Hayes stated preliminary responses to Hyperliquid’s JELLY event overstated the network’s prospective reputational threats.
” Let’s stop pretending hyperliquid is decentralised. And after that stop pretending traders in fact [care],” Hayes stated in an X post. “Wager you $buzz is back where [it] began in brief order cause degens gon na degen.”
Binance introduced JELLY perps on March 26. Source: Binance
Growing discomforts
On March 12, Hyperliquid faced a comparable crisis triggered by a whale who deliberately liquidated an approximately $200 million long Ether (ETH) position.
The trade expense depositors into Hyperliquid’s liquidity swimming pool, HLP, approximately $4 million in losses after requiring the swimming pool to loosen up the trade at undesirable rates. Ever since, Hyperliquid has actually increased security requirements for employment opportunities to “minimize the systemic effect of big positions with theoretical market effect upon closing.”
Hyperliquid runs the most popular leveraged perpetuals trading platform, managing approximately 70% of market share, according to a January report by property supervisor VanEck.
Continuous futures, or “perps,” are leveraged futures agreements without any expiration date. Traders deposit margin security, such as USDC, to protect employment opportunities.
According to L2Beat, Hyperliquid has 2 primary validator sets, each making up 4 validators. By contrast, competing chains such as Solana and Ethereum are supported by roughly 1,000 and 1 million validators, respectively.
More validators typically minimize the threat of a little group of experts controling a blockchain.
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