Due to suspicious trading activities, Hyperliquid urgently delisted the JELLY perpetual contracts, and most users will receive automatic compensation.
Hyperliquid announced the delisting of perpetual contracts related to the JELLY token, citing evidence of "suspicious market activities." According to the blockchain network, the non-profit organization within the Hyperliquid ecosystem—Hyper Foundation, will compensate most of the affected users for this incident.
On March 26, Hyperliquid posted on platform X: "Except for the marked addresses, all users' losses will be compensated by the Hyper Foundation." The platform added: "Compensation will be based on on-chain data and will be executed automatically in the coming days."
Meanwhile, Hyperliquid stated that its main liquidity pool HLP recorded about $700,000 in net income in the past 24 hours.
This incident further exposes the challenges Hyperliquid faces in becoming the most popular leveraged perpetual contracts (Perps) trading platform in Web3.
Perpetual contracts are leveraged futures contracts without an expiration date, where traders need to deposit margins such as USDC to maintain their positions.
JELLY's market volatility and manipulation controversy sparked a crisis for Hyperliquid
In January this year, Venmo co-founder Iqram Magdon-Ismail launched the JELLY token as part of the Web3 social media project JellyJelly. According to DexScreener data, the token's market value initially soared to about $250 million, then fell to the level of several million dollars. As of March 26, the market value of JELLY was about $25 million.
The controversy began when a trader "established a $6 million large short position on JellyJelly" and then "self-liquidated through on-chain pumping,"
Abhi, founder of the Web3 company AP Collective, posted on platform X. If Hyperliquid had not closed the position in time, the perpetual contract exchange might have faced the risk of being completely liquidated when the market value of JellyJelly reached $150 million.
This is not the first time Hyperliquid has faced such a crisis. On March 14, the platform increased traders' margin requirements after a massive liquidation of Ethereum (ETH) caused millions of dollars in losses to the liquidity pool. Two days before that, a whale trader deliberately liquidated about $200 million worth of ETH long positions, causing HLP to lose $4 million during the liquidation process.
Since March 15, Hyperliquid has required traders to maintain at least 20% margin in some positions to "reduce the systemic impact on the market during large position liquidations."
