- Popular decentralised exchange (DEX) Hyperliquid (HYPE) has delisted perpetual future contracts for Solana-based meme token JellyJelly (JELLY), impacting traders’ positions.
- The decision comes after Hyperliquid was forced to absorb a large liquidated short on their platform for JELLY.
- This has prompted wide-spread criticism regarding the decentralisation principles that Hype is meant to embody, as well as concern regarding Hyperliquid’s processes and operations.
- Hyperliquid had widely been considered a great success since it launched its decentralised exchange at the end of 2024.
Decentralised exchange Hyperliquid has sparked criticism over its reaction to a large liquidation on its platform, wherein it opted to remove the perpetual smart contracts for JELLY.
Why did Hyperliquid Delist JELLY?
A liquidation crisis initiated the move to delist Jelly. For background, March 26, 2025, began well for JELLY. The price increased, following both Binance and OKX launching perpetual future contracts for the token, with JELLY’s market cap reaching US$25 million (AUS$39.78 million).
However, that same day a trader on Hyperliquid reportedly opened a 20x leveraged US$6 million (AU$9.5 million) short position and then deliberately liquidated their own position by pumping the price of JELLY on-chain. This then forced Hyperliquid to absorb the short position.
Evidently Hyperliquid did not hold enough JELLY supply, and after an initial price plunge, a short squeeze began to ensue.
Related: BlackRock’s Crypto Fund BUIDL Reaches $1.7B, Welcomes Solana to its Growing Portfolio
The Public Response
There has been wide-spread criticism regarding both the response from Hyperliquid to delist JELLY, as well as how Hyperliquid’s processes and structure enabled such an event to occur in the first place.
Criticism stems from reputable figures, this includes an X post by Gracy Chen, CEO of Bitget, where she compared Hyperliquid to collapsed exchange FTX:
#Hyperliquid may be on track to become #FTX 2.0. The way it handled the $JELLY incident was immature, unethical, and unprofessional, triggering user losses and casting serious doubts over its integrity.
Gracy Chen, CEO of Bitget.Other prominent figures such as Arthur Hayes, acknowledged the failings of Hyperliquid in its consideration as a decentralised platform, but conveyed a viewpoint that the rest of the incident is essentially just noise given the platform’s overall success:
Further Context
Hyperliquid validators deciding to delist JELLY meant that US$3.7 million (AUS$5.88 million) in JELLY positions were settled at a price of US$0.0095 (AUS$0.015) per token. Hyperliquid has stated that it will make the affected users whole again.
Concern has also been raised about Hyperliquid only holding four validators. Validators aid in reducing the risk of insiders manipulating trades on the blockchain.
It is noteworthy that Solana holds approximately 1000 validators, whereas Ethereum has approximately 1 million validators.
Related: Fidelity Makes Bold Move into Solana Ecosystem, Files Official ETF Application with SEC
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