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With the rapid development of decentralized finance (DeFi), [Hyperliquid](https://www.gate.io/zh/futures/USDT/HYPE_USDT "Hyperliquid") As a new decentralized perpetual contract trading platform, with its innovative liquidity pool design and high leverage trading function, it quickly attracted the attention of a large number of cryptocurrency users. However, a dispute involving the end of March 2025 [JELLY](https://www.gate.io/zh/futures/USDT/JELLYJELLY_USDT " JELLY") The market manipulation of tokens has put Hyperliquid in the spotlight. This not only exposes potential weaknesses in the platform's risk management, but also triggers a profound reflection within and outside the industry on the governance mechanism of decentralized exchanges (DEX).

## The rise of Hyperliquid and the anomaly of the JELLY Token

[Hyperliquid](https://www.gate.io/zh/futures/USDT/HYPE_USDT "Hyperliquid") Is a blockchain-based perpetual contract trading platform, its core feature lies in the internal liquidity pool (HLP), which aggregates user funds to provide depth liquidity for trading. The platform supports a variety of token trading pairs, among which [JELLY](https://www.gate.io/zh/futures/USDT/JELLYJELLY_USDT "JELLY ") Tokens, as a project with a relatively small market value, have not been attracting much attention for a long time.

However, on March 26, a mysterious trader (allegedly with a wallet address starting with 0xde95) established a short position worth millions of dollars on JELLY tokens on Hyperliquid, and then bought a large amount of JELLY on-chain and on other exchanges, causing its price to skyrocket by over 230% in a short period of time, increasing its market value from $10-20 million to about $50 million.

This operation resulted in Hyperliquid's HLP passively taking over a huge short position, with unrealized losses reaching as high as $13.5 million at one point. What's even more worrying is that if the JELLY price continues to rise to $0.17 (at the time it was already close to $0.16), the platform's treasury (around $240 million) may even face liquidation risk.

In the face of this crisis, the Hyperliquid validators' committee took swift action, voting to delist the JELLY perpetual contract on March 27 and forcibly settle all positions at a price of $0.0095, avoiding greater potential losses.

## Technical and governance disputes behind the event

This storm is not just a simple
**Market Manipulation**, it further exposes the dual challenges of Hyperliquid in terms of technology and governance. From a technical perspective, the high leverage trading nature makes Hyperliquid extremely sensitive to price fluctuations, while the JELLY token, as a low market value asset, is easily manipulated by operators using the 'pump and dump' strategy. In this situation, although HLP's design can provide liquidity, it is difficult to cope with extreme market behavior, leading the platform to directly intervene in the market.

From a governance perspective, the decentralization of Hyperliquid has also been questioned. With a limited number of validators and a highly centralized decision-making process, the decision to emergency delist the JELLY perpetual contract, while mitigating losses, has been criticized by the community as 'opaque' and even 'contrary to the spirit of decentralization.' In contrast, centralized exchanges quickly listed the JELLY perpetual contract during the incident, not only boosting market activity but also seen as a 'competitive response' to Hyperliquid, further highlighting the differences between decentralized and centralized platforms in crisis management.

## The ecological impact of Hyperliquid and JELLY tokens

The direct impact of the incident on Hyperliquid is the sharp drop in the price of its native token HYPE. HYPE fell by over 16%-20% within a day, with a cumulative decline of over 60% from its all-time high, reflecting a shake in market confidence in the platform. Gracy Chen, CEO of Bitget, even publicly warned that Hyperliquid's response measures could turn it into 'FTX 2.0', questioning its ability in risk management and user fund security. While controversial, this statement undoubtedly exacerbates the community's panic.

![](https://gimg2.gateimg.com/image/article/1743042498EHasgNwo.png)

For the JELLY Token, despite the sharp rise in price due to manipulation at the beginning of the event, the market heat of JELLY quickly cooled down as Hyperliquid delisted its trading pairs. In the short term, its price fluctuations attracted speculators' attention, but with a lack of fundamental support, the long-term value of the JELLY Token remains uncertain. This event has also drawn more attention to the potential risks of low market value tokens in high leverage trading.

## Industry Insights and Future Outlook

The controversy between Hyperliquid and JELLY tokens
**The entire DeFi industry has sounded the alarm** First of all, decentralized exchange platforms need to optimize liquidity pools and risk control mechanisms at the technical level to prevent similar market manipulation behaviors. For example, by introducing price oracles or dynamically adjusting leverage ratios, the likelihood of extreme fluctuations can be effectively reduced. Secondly, the improvement of governance models is crucial. If Hyperliquid can expand the validator community and enhance decision transparency, it may regain user confidence.

For investors, this event reminds people to choose platforms and tokens carefully when participating in perpetual contract trading, especially to remain vigilant for assets with smaller market capitalization.
**The brief surge of JELLY tokens is eye-catching** But the risks behind it cannot be ignored. For Hyperliquid, this is both a crisis and an opportunity. If the platform can learn from this incident, optimize its technology and governance, it may be able to stand firm in the competitive DeFi market.

## Conclusion

[JELLY](https://www.gate.io/zh/futures/USDT/JELLYJELLY_USDT " JELLY") Whether it's the emergency response of Hyperliquid or the dramatic fluctuations of the JELLY Token, they have provided valuable lessons for the industry. Against the backdrop of the continuous evolution of blockchain technology, balancing innovation and security remains a common challenge for all DeFi projects. For investors and users paying attention to Hyperliquid and JELLY Token, staying informed and making rational judgments is the best strategy to deal with future uncertainties.

<div class="blog-details-info">
<div>Author: Rooick Z., Gate.io Researcher
<div class="info-tips">*This article represents only the author&#39;s point of view and does not constitute any trading advice. Investment carries risks, and decisions should be made cautiously.
<div>*This content is original and copyrighted by Gate.io. If you need to reprint, please indicate the author and source, otherwise legal responsibilities will be pursued.
</div><p></p>
</div></div></div>

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Hyperliquid and JELLY Token: A Deep Analysis of Market Turmoil