After a transaction case involving Jelly caused a loss of $10.63 million, Hyperliquid introduced additional security measures.
This issue stemmed from fraudulent traders who self-traded a fairly significant jelly position, causing a price spike and a liquidation process, which absorbed the vault of high lipid (hype) market production. In a March 27th post on X, the platform outlined some of the steps it took to improve risk management.
The stricter restrictions on liquidator vaults, which serve as emergency funds to cover losses from failed transactions, are one of the important updates. By reducing CAP, Hyperliquid hopes not to assume excessive risks that could undermine the overall stability of the platform.
The vault rebalance has also decreased. In the past, frequent rebalancing has led to frequent changes in exposure, making risk difficult to predict. Slowing this process creates a more stable risk management system.
Another major improvement is how the liquidation vault works. Previously, if the liquidator’s vault makes a loss, the funds will automatically be withdrawn from other safes. Currently, if the loss reaches a certain level, automatic settlement will begin. Instead of distributing risks to other safes, this update will help contain them.
You might like it too: Bitget CEO says high fat gold could be FTX 2.0 amid the jelly incident
High lipids also improve open interest caps, which sets the maximum amount that traders can bet on a single asset. Currently, these caps are dynamically adjusted according to market conditions, reducing the likelihood that the system will be destroyed by sudden price fluctuations.
Additionally, validators can decide when to delete dangerous assets through the new voting system. To avoid further problems, tokens may be obsolete if they fall below the safety threshold. Despite these updates, high lipids continue to face difficulties.
According to data from Defi Llama, the total value locked in the liquidity vault fell to $180 million from $540 million in February on March 28th.
The hype is also struggling to recover. The token was traded for around $16 before the incident. At the time of press, it fell 3% in the last 24 hours, down 59.83% from the $34.96 peak, down to $13.98. Furthermore, hype trading activity has declined significantly, bringing volume down 79.8% to $94.3 million over the past day.
read more: Circle releases the USDCKIT SDK to simplify payment integration for USDC
Discover more from Earlybirds Invest
Subscribe to get the latest posts sent to your email.
