Hyperliquid, a well-known decentralized perpetual exchange (DEX) built on a custom Layer 1 blockchain, has announced the delisting of JELLYJELLY after Binance and OKX launched its futures listings as per Solid Intel.
Why is the JELLY Token Delisted?
The decision to delist the token came right after a major liquidation event took place, where a high-leverage trader faced significant losses. The trader had opened a long-position in Ethereum, deposited 15.23 million USDC, but after withdrawing 17.09 million USDC, their margin stooped low.
This triggered the DEX’s liquidation mechanism, which led to a loss of $4 million for the HLP fund. Despite this huge liquidation, the trader managed to make profit of $1.8 million which caught attention of the crypto industry. The community though this to be one of the tactics for manipulating the market.
This incident then sparked concerns within the community regarding Hyperliquid’s risk management strategies and the actual effectiveness of its liquidation system. In response to these challenges, the DEX has adjusted leverage limits to protect against large-scale liquidations in the future.
Why is Hyperliquid being used by the Bad Actors?
Previously, the DEX has faced similar issue when William Parker also known as the “50x leverage whale” also used the same DEX to make profit of $20 million by using strategies involving 50x leverage on Bitcoin and Ethereum positions.
Hyperliquid has become a target for bad actors because this DEX provides high leverage options and decentralized trading, which offers anonymity and there is a reduced regulatory oversight. These factors attract risk-seeking traders and malicious individuals that exploit market volatility and platform vulnerabilities for great profits.
Even though the DEX’s rapid growth and innovative design are appealing to the users, lets not forget that they are also equally appealing to the bad actors and this incident just highlights the need for stronger security measures and risk management protocols on Hyperliquid’s end.
Also Read: Hyperliquid Launches Mainnet Linking of HyperCore and HyperEVM for DeFi Growth
