On March 26, the decentralized derivatives trading platform Hyperliquid faced a sudden test of trust.
A price manipulation operation led by whale accounts triggered abnormal fluctuations in the $JELLY perpetual contracts, exposing the platform's liquidity pool (HLP) to a potential risk exposure of up to $200 million. A few hours after the crisis occurred, Hyperliquid quickly decided to delist the related contracts through a vote by the validators committee and promised that the foundation would automatically fully compensate non-violating users.
Although the incident has temporarily come to an end, what follows is a more noteworthy issue: When a platform that emphasizes "decentralized governance" chooses centralized decision-making and asset compensation in the face of risk, are its underlying governance logic, brand PR strategy, and risk control system mature enough? And are they sufficient to support its sustainable development during periods of severe volatility?
From the speed of handling to public statements, to the transparency of mechanisms and communication with users, Hyperliquid's path in responding to this crisis provides a live "real-world example" for Web3 projects. We attempt to review this event from a PR and operational perspective, trying to answer a core question: Technical crises can be quickly stopped, but how can brand trust be repaired?
1. Initial Crisis Response: Quick Loss-Cutting and Emotional Reassurance
1. Timely loss-cutting, controlling the spread of risk
Unlike some projects that have been "slow to respond" in past crises, Hyperliquid showed a relatively mature crisis response, quickly seizing the "golden time" for PR:
Hyperliquid simultaneously announced official statements on Twitter and Telegram, indicating that the governance committee quickly intervened and delisted the involved assets, demonstrating the platform's consistent stance on "stabilizing the overall situation". Compared to the 2022 Solend incident, where the Solana lending protocol wanted to take over the assets of a giant whale account, sparking community controversy over the "decentralization" principle, Hyperliquid completed emergency decisions through on-chain governance processes, achieving a certain balance between operational compliance and efficiency.
2. Automatic compensation, avoiding repeated disputes with users
Hyperliquid promised full compensation by the foundation for non-violating users and adopted an "automatic compensation" approach, reducing user anxiety and communication costs. This approach is not common in DeFi protocols and to some extent reflects Hyperliquid's attempt to prioritize user protection and close the trust gap with ordinary traders.
Similar "safety net" strategies also appeared in OptiFi in 2022, which proactively compensated all user asset losses after accidentally shutting down the mainnet contract, proving that a straightforward acknowledgment of mistakes can effectively help projects regain trust.
3. Public data, building confidence in handling
Although the announcement disclosed that "HLP lost about 700,000 USDC within 24 hours", this figure is not small, but the quick verification of the true nature of the event and the timely use of specific data to clearly convey the "losses are controllable" message, is undeniably a positive example of "proving with facts".
Compared to the information asymmetry and data concealment during the FTX collapse, this transparency can actually become a protective moat for brand credit, as standing upright and correcting mistakes is also a "loss-cutting" strategy.
2. Risk Control Failure and Ambiguous Governance Signals: Systemic Weaknesses in Crisis
1. Delayed risk identification, absence of warning mechanisms
Essentially, this crisis stemmed from whales exploiting position leverage and spot price linkage mechanisms, creating market anomalies without clear restrictions, exposing blind spots in the platform's trading behavior monitoring and position risk warning. Although different from contract vulnerabilities or flash loan attacks, its essence also reflects the general weakness in the construction of on-chain risk control systems in DeFi platforms.
Similar to the 2021 CREAM Finance incident, which suffered a flash loan attack due to a lack of real-time risk control models, this also confirms from another angle the industry's deficiency in "actively identifying risks". The construction of risk control systems remains an "unsolved lesson" for most DeFi protocols.
2. Ambiguous mechanisms and governance black box: Why are user concerns difficult to appease?
Although Hyperliquid made compensation promises at the first moment, key details disclosed in its announcement were clearly insufficient. How is compensation calculated? What chain data is the selection logic based on? Does the source of funds have sustainability? These points, which should have been clarified immediately, were handled vaguely, causing secondary anxiety among users, affected by the liquidation of $JELLY tokens, with a net outflow of 184 million USDC from the platform in a single day.
Meanwhile, the platform emphasized "deciding to delist contracts through a vote by validators", but did not simultaneously publish the voting mechanism, participating nodes, and governance processes, leading some users to question whether its "decentralized governance" was merely a formality. Especially when the handling results were out but the processes were not visible, users never got a clear answer to the core question of "who has the right to make decisions".
3. When doubts come from peers, decentralized trust is challenged again
In addition to user concerns, Bitget CEO Gracy also publicly called out, suggesting that Hyperliquid might become FTX 2.0, even comparing it to "a mirror image of a centralized platform", and pointed out risks in its product architecture such as insufficient position limits, missing risk control models, and mixed use of insurance pools.
These voices reflect the industry's new round of questioning about "governance and power boundaries": When decentralized platforms face systemic risks, is it necessary to set "red line mechanisms"? And does the project have enough professional capability to complete the risk control loop without compromising openness?
3. From Compensation to Reflection: A Crisis That Should Awaken Web3's Baseline Awareness
Hyperliquid's rapid loss-cutting and compensation mechanisms certainly prevented the situation from spiraling out of control, but the "operational value" it truly brought is far more than just a review of an emergency plan. On the contrary, this event is forcing Web3 projects to re-examine: In a market dominated by decentralized narratives, when a real crisis arrives, can the platform take on responsibilities that match its vision?
The reason this storm has sparked widespread discussion is not because of "whether the compensation is sufficient", but because it touches on the most sensitive issues for users: Who has the right to decide the rules? Is the compensation fair? Should risk control have been warned earlier? And these are not issues that can be simply explained by "writing a procedure".
Compared to a textbook crisis SOP, Web3 users care more about: Are you willing to speak from the user's perspective at the first moment? Are you brave enough to publish the complete process, accept questioning, and open governance? Can you let the community know that their assets are not entrusted to a "faceless entity", but to a platform that truly has the right to express and choose?
This is not a competition about "compensation speed", but a long run about "mechanism trust". Hyperliquid has handed in the first response paper, but the real brand repair starts only after this paper.
Written at the end: After the crisis, the real test begins
Hyperliquid's shortcomings in risk identification mechanisms, governance transparency, and information disclosure rhythm have been magnified. Currently, the "first phase" of crisis response has been completed, but what really affects the future direction is the "second phase" of deep handling.
How to fulfill compensation? How to upgrade risk control? How to make governance more transparent? The answers to these questions will determine Hyperliquid's long-term positioning in the minds of users.
In the Web3 environment, where everything is transparent, nodes are numerous, and community voices are extremely sensitive, "not making mistakes" is a luxury, but "how to respond after making mistakes" is the core capability for a project's long-term survival.
In some ways, Hyperliquid's recent turmoil is a "real-world test" against the entire DeFi narrative. The test is not only about the technical architecture but also about governance resilience and PR capabilities.
