What a hyperliquidity supplier (HLP), a safe that is part of the derivative exchange hyperliquid, faced an exhausting loss after a merchant has allegedly manipulated the price of the jelly token.
The native token of hyperliquid (hype) dropped by 20% after the NLP NLP was temporarily at $ 13.5 million negative dollars.
According to Lookonchain, a merchant who held $ 4.85 million of jelly token combined a short trader on the hyperliquid with chain purchases, which liquidated the position on the hyperliquid and essentially meant that HLP inherited this short position.
HLP is an automated market manufacturing bot which is linked to the exchange liquidation engine.
The merchant then aggressively bought the jelly on the spot scholarships, increasing the price and temporarily causing the unpaid loss of HLP by $ 13.5 million. The liquidity on decentralized exchanges is minimal, so the price moves is relatively easy compared to the hyperliquid.
Then, in order to minimize the losses, the hyperliquid seemed to force the closure of the jelly market, adjusting it to $ 0.0095 as opposed to $ 0.50 which was transmitted to Oracles via decentralized exchanges.
“After evidence of a suspicious activity on the market, the validator has summoned himself and voted to bring back the Perps frosts,” wrote Hyperliquid on X. “All users apart from the addresses reported will be made from the hyper foundation. This will be done automatically in the coming days according to Onchain data.”
The CEO of Newfound Research, Corey Hoffstein, questioned the legality of hyperliquidal actions while social networks have become indignation. The merchant who handled the jelly market was found with a small loss.
The delimitation of hyperliquid led another player to enter the mixture: Binance. The largest cryptocurrency scholarship in a volume of negotiation saw an opportunity and announced that it registered the term contracts linked to Jelly, which rose prices in cash by 560%.
The case establishes similarities with a feat on the Mango markets in 2022, where a merchant called Avraham Eisenberg created a “very profitable negotiation strategy” which involved manipulating the prices of the Oracle to guarantee a gain on the derivative markets.
