Forwarding the original title “Hyperliquid price breaks through 30 dollars again, raising questions about why it can emerge strongly?”

In the first half of the year, Hyperliquid, which was once questioned and faced FUD, has stood up again.

On May 22, as BTC broke through the $110,000 mark, HYPE surged past 30 USDT with a 24-hour increase of 14.79%, and its total FDV stabilized at $29 billion, rising to 14th place in the cryptocurrency market capitalization. In contrast, a giant whale has been shorting HYPE, worth $57.14 million, with 5x leverage around $20.4 since May 8, currently facing an unrealized loss of $18.8 million. To prevent liquidation, this address has added margin three times, the latest being two hours ago, “struggling” to increase its investment by $2.04 million USDC to avoid forced liquidation.

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

And it is important to note that two months ago, Hyperliquid was still mired in a treasury risk of near liquidation and a “decentralization” FUD crisis. Bitmart founder Arthur Hayes directly attacked Hyperliquid on X, stating that “HYPE will return to the starting point” and urged everyone to “stop pretending that Hyperliquid is decentralized.”

On-chain Perp demand remains strong

After the JELLY short squeeze event calmed down, more and more whales began to choose Hyperliquid. According to data from The Block, Hyperliquid had already accounted for about 9% of Binance’s contract trading volume for two consecutive months before the short squeeze event occurred.

According to Dune data, Hyperliquid is experiencing rapid growth in both trading volume and user numbers. Have the whales forgotten about the short squeeze event?

Hyperliquid does not choose an absolute decentralized philosophy, but prioritizes capital efficiency and protocol security. As Zuo Ye wrote in the article “Hyperliquid: 9% Binance, 78% Centralization”—in the sequence of Perp DEX, Hyperliquid’s innovation lies not in architectural innovation, but in a “slightly centralized” approach, learning from GMX’s LP tokenization, and combining with token listings and airdrop strategies to continuously incentivize market competition, successfully capturing the derivatives market firmly held by CEX. This is not a defense of Hyperliquid, but rather the underlying essence of Perp DEX; absolute decentralized governance cannot respond to black swan events quickly enough. To respond efficiently, sword bearers are inevitably required.

Therefore, the whales chose to believe in Hyperliquid, which is primarily based on smart contracts and supplemented by staking node voting, instead of established CEXs. The following three factors are key to Hyperliquid emerging from the shadows.

1. Anonymity requirements. Many whales and large holders place great importance on personal privacy protection and do not want to be subjected to the withdrawal and transfer restrictions that may exist on centralized exchanges.

2. Good liquidity. Only places with large pools can accommodate whales flipping. In fact, only a few major centralized exchanges can match the liquidity of Hypeliquid.

3. Public Positions. KOLs like James can create a “money and influence” cycle—using Hypeliquid’s on-chain public large positions and profits to enhance their influence, and then further leverage that influence to encourage retail investors to follow their trades, thereby influencing market direction. In traditional CEX, KOLs also need to connect to the exchange’s API to display their positions.

In this round of price increase, the whales in Hyperliquid are very active. First, there was the extreme operation by the “50x Insider” (before HYPE modified its leverage), followed by Meme legend James Wynn openly going long. Especially the latter, who made over 40 million USD profit by aggressively opening nearly 1 billion in long positions during BTC’s surge past its historical high.

At the same time, in order to solve the problems of stablecoin yield and outflow, Hyperliquid has launched the native stablecoin HUSD. HUSD integrates two core insights: unifying the priced asset (stablecoin) used in transactions and the cash flow generated from it within the trading platform system. The end result is a stablecoin with the nature of a “public good,” which transforms the originally static reserve interest into active, compound growth within the Hyperliquid ecosystem.

REVIEW: JELLY SQUEEZES THROUGH THE HAZE

Let’s turn back the clock to the evening of March 26, when the meme coin JELLYJELLY faced a short squeeze, surging by 429% within an hour. The Hyperliquid Vault took over an address and liquidated the JELLYJELLY short position, which had once suffered a loss exceeding 10.5 million dollars. At that moment, if JELLYJELLY reached 0.15374 dollars, the Hyperliquid Vault would lose all of its 230 million dollars in funds; and as funds flowed out of the Hyperliquid Vault, it would further lower the liquidation price of JELLYJELLY.

After the incident, OKX and Binance announced the launch of the JELLYJELLY perpetual contract that evening, while Hyperliquid quickly delisted JELLYJELLY after the futures contract was launched on Binance and OKX. The massive loss short positions of JELLYJELLY in the Hyperliquid Vault have also been settled.

Just when the onlookers thought Hyperliquid was conceding defeat, the situation took an “unexpected yet reasonable” turn. According to historical data from the Hyperliquid official website, the JELLYJELLY short position taken over by Hyperliquid Vault was closed at 0.0095 USD at 11:15 PM, and the anticipated loss of over ten million USD did not materialize; the HLP Vault even made a profit of 703,000 USD on this position. Subsequently, Hyperliquid announced that after evidence of suspicious market activity was discovered, a meeting of validators was convened to vote on the delisting of the JELLY perpetual contract. All users, except for the marked addresses, will receive full compensation from the Hyper Foundation.

According to Parsec panel data, during the hours following the Jelly liquidation event, the USDC net outflow on the Hyperliquid platform reached up to 140 million dollars. Prior to that, during the four days surrounding the ETH whale long liquidation event on March 12, the total USDC net outflow from Hyperliquid was nearly 300 million dollars. From February 26 to March 26, Hyperliquid’s USDC balance also decreased from about 2.5 billion dollars to 2.07 billion dollars.

In response to this incident, many figures led by several CEX CEOs have raised questions about Hyperliquid. They have consistently indicated that Hyperliquid, which claims to be a decentralized exchange, operates more like an offshore CEX without KYC/AML, and its immature operations could lead to FTX 2.0. However, some have pointed out that the leading exchanges are the most suspicious instigators behind this pursuit of Hyperliquid. A user named off_thetarget even revealed on X that as early as March 24, someone contacted him to help promote the listing of JELLYJELLY on Binance. After this blogger assisted in contacting the coin listing team, the feedback was that it was temporarily unlikely to list some MEME coins. Yet, the fact is that in less than two days, Binance decided to list the JELLY contract, which clearly suggests there is more to the story.

Moreover, this is not the first time Hyperliquid has encountered a similar issue. On March 13, a whale using 50x leverage opened a long position in ETH worth approximately $300 million on Hyperliquid, with a peak unrealized profit of $8 million. However, the user subsequently withdrew most of the principal and profits, causing the liquidation price to be pushed up, and the position was eventually liquidated, netting around 1.8 million USDC. Meanwhile, the platform’s insurance fund (HLP Vault) suffered a loss of about $4 million as a result. Hyperliquid Vault data shows that after the whale actively triggered the liquidation mechanism, HLP lost a total of $3.45 million.

In this regard, Hyperliquid announced that it will adjust leverage limits to optimize liquidation management and enhance market buffer capacity during large-scale liquidations. The maximum leverage for BTC will be adjusted to 40 times, and the maximum leverage for ETH will be adjusted to 25 times.

Considering the scale of Hyperliquid and the price performance of Hype, as a project for the 2024 TGE, the role of its Perp DEX is an essential on-chain necessity. In the crypto world, being criticized by many is not scary; being irreplaceable is the real ace.

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1. This article is reprinted from [Foresight News], the original title “Hyperliquid’s coin price breaks through 30 dollars again, raising questions about how it can rise unexpectedly?”, copyright belongs to the original author [Bright, Foresight News], if there are any objections to reprinting, please contactGate Learn TeamThe team will process it as soon as possible according to the relevant procedures.
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