Repost the original title “Hyperliquid’s price breaks through $30 again, why is it questioned for its sudden rise?”

Hyperliquid, once again, stood up after being questioned and FUDed in the first half of the year.

On May 22, as BTC broke through the $110,000 mark, HYPE broke through 30 USDT, up 14.79% in 24 hours, and the total FDV stood at $29 billion, jumping to the 14th place in the crypto market capitalization. On the contrary, a giant whale has been shorting $57.14 million worth of HYPE with 5x leverage near $20.4 on May 8, and the position is currently floating at $18.8 million. In order to prevent liquidation, the address has made three margin calls, the latest of which was an additional $2.04 million USDC two hours ago to prevent the position from being liquidated.

At the same time, Hyperliquid’s official announcement has announced that its platform data has set multiple historical highs today, including a total open interest (OI) of 8.9 billion US dollars, a 24-hour trading fee of 5.4 million US dollars, and a total locked USDC amount of 3.2 billion US dollars.

But it is worth noting that just two months ago, Hyperliquid was almost liquidated due to a treasury crisis, facing FUD about being ‘decentralized’. Bitmart founder Arthur Hayes directly attacked Hyperliquid on X, saying ‘HYPE will return to the starting point’ and urging everyone to ‘stop pretending that Hyperliquid is decentralized’.

On-chain Perp demand remains unabated

After the JELLY short squeeze incident subsided, more and more whales instead chose Hyperliquid. According to The Block data, Hyperliquid had already accounted for around 9% of Binance’s futures trading volume for two consecutive months before the short squeeze incident occurred.

According to Dune data, Hyperliquid is experiencing rapid growth in both trading volume and number of users. How come, have the whales forgotten about the short squeeze incident?

Hyperliquid’s choice is not an absolute decentralized concept, but rather prioritizes capital efficiency and protocol security. As Lord Zuo wrote in the article ‘Hyperliquid: 9% Binance, 78% Centralized’—in the sequence of Perp DEX, the innovation of Hyperliquid lies not in the architecture, but in learning from GMX’s LP tokenization in a ‘slightly centralized’ manner, and combining listing and airdrop strategies to continuously incentivize market games, successfully seizing the derivative market firmly held by CEX. This is not defending hyperliquid, but the foundation of Perp DEX. Absolute decentralized governance cannot cope with black swan events, react quickly enough, and effectively respond, necessitating a swordsman.

So, the whales chose to believe in the ‘sword bearer’ Hyperliquid, which focuses on smart contracts as the main aspect and staking node voting as the secondary aspect, rather than the mature CEX. The following three factors are key to Hyperliquid emerging from the haze.

1. Anonymous demand. Many whales and large holders pay great attention to personal privacy protection, and at the same time, do not want to be subject to possible restrictions on withdrawals and transfers from centralized exchanges.

2. Good liquidity. Only in large pools can whales turn over. In fact, only a few top centralized exchanges can match the liquidity of Hypeliquid.

3. Open positions. Influencers like James and other KOLs can form a ‘money and influence’ cycle by using Hypeliquid’s on-chain open large positions and profit to enhance their own influence, and then further promote retail investors to follow suit through their influence, thereby achieving the goal of influencing the market direction. In traditional CEX, KOLs also need to connect to the exchange’s API to display their positions.

In this round of rise, the whales in Hyperliquid are very active. There is the ‘50x Insider’ (before HYPE’s leverage modification) extreme operation in front, and the meme legend James Wynn openly goes long in a big way. Especially the latter, in the trend of BTC breaking through historical highs, made over 40 million US dollars in profits by aggressively scooping up nearly 1 billion long positions.

At the same time, in order to break the deadlock of stable currency proliferation and outflow, Hyperliquid has launched its native stablecoin HUSD, which integrates two core insights: incorporating the valuation assets (stablecoins) used in trading and the resulting cash flow into the trading platform system. The end result is a ‘public product’ type of stablecoin, which transforms the originally static reserve interest into active and compound growth within the Hyperliquid ecosystem.

Review: JELLY Rolling Clears the Air

Let’s rewind to the evening of March 26th, when Meme coin JELLYJELLY was squeezed by short sellers, surging 429% in one hour. Hyperliquid Vault took over a short position of JELLYJELLY after a self-liquidation of an address, temporarily incurring a floating loss of over $10.5 million. At that time, if JELLYJELLY reached $0.15374, Hyperliquid Vault would lose all of its $230 million funds; and as the funds flowed out of Hyperliquid Vault, it would further reduce the liquidation price of JELLYJELLY.

After the incident, OKX and Binance successively announced the launch of JELLYJELLY perpetual contracts that evening, while Hyperliquid quickly delisted JELLYJELLY after launching futures contracts on Binance and OKX, and the massive short position loss of JELLYJELLY in the Hyperliquid Vault has also been settled.

Just as the onlookers thought that Hyperliquid was giving up and cutting losses, the situation took an unexpected turn. According to historical data from the Hyperliquid official website, the JELLYJELLY short position taken over by the Hyperliquid Vault was closed at 23:15 at $0.0095 per share. The expected loss of over tens of millions of dollars did not occur. In fact, the HLP Vault even made a profit of $703,000 on that position. Subsequently, Hyperliquid announced that after discovering evidence of suspicious market activity, the validators convened a meeting and voted to delist the JELLY perpetual contract. Except for the flagged addresses, all users will receive full compensation from the Hyper Foundation.

According to Parsec panel data, within hours of the Jelly liquidation event, the net outflow of USDC on the Hyperliquid platform reached as high as $140 million. In the four days before and after the ETH whale long liquidation event on March 12, the total net outflow of USDC from Hyperliquid was close to $300 million. From February 26 to March 26, Hyperliquid’s USDC balance also decreased from about $2.5 billion to $2.07 billion.

Regarding this incident, many individuals, including CEX CEOs, have questioned Hyperliquid. They unanimously expressed that the operation of Hyperliquid, which claims to be a decentralized exchange, is more like an offshore CEX without KYC/AML, and immature operations may also become FTX 2.0. However, some have pointed out that behind the pursuit of Hyperliquid, the top exchanges are the most suspicious initiators. User off_thetarget even revealed on X that as early as March 24th, someone contacted him to help promote JELLYJELLY’s listing on Binance. The blogger assisted in contacting the exchange’s team, and the feedback was that it was temporarily unlikely to list some MEME. However, the fact is that in less than 2 days, Binance decided to list the JELLY contract, indicating hidden motives.

Moreover, this is not the first time Hyperliquid has encountered a similar issue. On March 13, a whale using 50x leverage opened an ETH long position worth about 300 million US dollars on Hyperliquid, with a maximum floating profit of 8 million US dollars. However, the user subsequently withdrew most of the principal and profits, causing the liquidation price to rise, resulting in the position being liquidated, with a net profit of about 1.8 million USDC. The platform’s insurance fund (HLP Vault) suffered a loss of approximately 4 million US dollars as a result. Data from the Hyperliquid Vault shows that after the whale actively triggered the liquidation mechanism, HLP incurred a loss of 3.45 million US dollars.

In response, Hyperliquid announced adjustments to leverage limits to optimize liquidation management, enhance market buffering capacity during large-scale liquidation, with maximum leverage for BTC adjusted to 40 times and for ETH adjusted to 25 times.

Judging from the scale of Hyperliquid and the price performance of Hype, as a project with a 24-year TGE, the role of its Perp DEX is a real on-chain demand. In the currency circle, being criticized by many is not terrible, being irreplaceable is the ace.

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1. This article is reprinted from [Foresight NewsThe original title, “Hyperliquid’s price breaks $30 again, why can it rise unexpectedly?”, copyright belongs to the original author [Bright, Foresight News], if you have any objections to the reprint, please contactGate Learn TeamThe team will process it as soon as possible according to the relevant procedures.
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