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A single trader’s ambitious move on March 26, 2025, pushed Hyperliquid—a major decentralized exchange (DEX)—to the brink of collapse.
What started as a calculated $6 million short position on JellyJelly (JELLY), a little-known token with a modest $10 million market cap, spiraled into a financial whirlwind that threatened a $230 million vault and sparked a fierce debate about the soul of DeFi.
A Short Position Sets the Stage
The saga kicked off with a trader’s bold play on Hyperliquid, a platform celebrated for its perpetual futures trading.
On March 26, they opened a $6 million short position on JELLY—a token so small it barely registered on most radars.
But this wasn’t a typical trade. In a cunning twist, the trader removed the margin, consequently dumping the position onto Hyperliquid’s HLP vault, a safety net designed to absorb liquidated trades.
Suddenly, the platform itself was on the hook, bearing the full weight of the risk. The market didn’t wait long to respond.
A short squeeze erupted, propelling JELLY’s market cap from $10 million to a staggering $50 million in under an hour.
Hyperliquid watched helplessly as its losses swelled to $12 million. The stakes were astronomical.
If JELLY’s price had climbed to $0.15374, the exchange’s entire $230 million vault could have vanished, leaving a smoking crater in its wake.
While Hyperliquid scrambled to contain the damage, centralized exchanges (CEXs) like Binance and OKX listed JELLY perpetual futures. That meant injecting fresh volatility into an already frenzied market.
The move paid off for some. A newly created wallet, tagged as 0x20e8, swooped in with a massive long position, pocketing $8.2 million in profits with surgical precision.
The mastermind behind the original short wasn’t done either. They then shuffled $7.17 million across three Hyperliquid accounts, cashing out $6.26 million while leaving $900,000 locked and untouchable.
Hyperliquid’s Counterstrike: A Forced Delisting Sparks Outrage
With its vault teetering on the edge, Hyperliquid’s leadership made a gut-wrenching call. On March 26, they force-delisted JELLY perpetuals, pegging the token’s price at $0.0095.
The move liquidated 392 million JELLY tokens worth $3.72 million. This allowed Hyperliquid to claw back a $703,000 profit and stanch the bleeding.
The backlash was swift and brutal. On-chain sleuth ZachXBT fired the first shot. he accused Hyperliquid of mimicking the centralized playbook of FTX.
“This isn’t DeFi—it’s a power grab,” he argued, pointing to the platform’s unilateral action. Bitget’s CEO piled on, branding it “FTX 2.0” while slamming the decision as a betrayal of decentralized principles.
Later, Binance, a rival CEX, also joined the chorus of disapproval. Even so, Hyperliquid had its defenders.
DeFi purists highlighted the governance process: validator nodes had greenlit the delisting in a lightning-fast vote, reaching quorum in just two minutes.
To them, this wasn’t centralization—it was a community stepping up to save itself.
