Oak Security experts explain what caused the issue to be caused by the jelly token exploit issue.
The reaction is still mounted from an exploit that sacrifices the cost of $10.63 million losses for users of high lipids (hype). The reaction appears to have one thing in common. This calls for high lipids for its practice.
Dr. Jan Philipp Fritsche, managing director of Oak Security, shared the analysis with crypto.news. According to Fritsche, exploits are not caused by bugs, but rather are predictable failures, and can pose risks to other Defi protocols as well.
Jelly exploits appear to be the result of coordinated market manipulation by multiple users. Specifically, one trader opened a $5 million short position in Jelly, but removed the margin. The high lipids remained in their position, and then other traders adjusted the short aperture.
“The attackers opened up a massive opposing position with jelly, knowing that one side would collapse and the other would cash out. The protocol ate losses as payments were not capped and the risks were not isolated.
Fritz described the exploit as “an example of a vegariss textbook with no price.” This is a traditional financial concept that refers to the implicit volatility of an asset. He emphasized that many Defi protocols still cannot explain this important risk metric.
Fat under fire for jelly exploits
This is not the first time industry figures have criticised high lipids for the jelly incident. Following the exploit, Bitget CEO Gracy Chen calls Exchange practices “immature, unethical and unprofessional” and warns it could be FTX 2.0.
Hyperliquid is committed to compensate users affected by the exploit, but damage to its reputation may already be happening. More importantly, this exploit draws attention to the broader vulnerabilities of the decentralized financial sector.
Crypto-loss by category | Source: Hacken
In 2024, Defi Exploits spent a loss of $308.7 million on users. It was more than a ragpur, accounting for $109.9 million. A few days after the jelly exploit, the defi protocol fell victim to another exploit, losing all of its total amount of $355,000.
read more: “We Don’t Bend to Spoilers”: A group of geniuses forced to sell Bitcoin after court orders
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