Hyperliquid, the decentralized perpetuals trading platform, has introduced a significant update to its blockchain infrastructure. The upgrade introduces fully on-chain validation for asset delisting.
This follows after a $6 million exploit, where a whale forced a short squeeze of the JELLY memecoin, which led to the exchange delisting the memecoin.
Hyperliquid introduces fully on-chain validation before asset delisting
In a post on X, Hyperliquid revealed that it has upgraded its blockchain, introducing fully on-chain validator voting for asset delisting. This development enables a quorum of validator stakes to autonomously trigger asset removals directly on-chain without the need for off-chain coordination.
Hyperliquid said the move is a show of its commitment to enhancing decentralized governance within its ecosystem, following the backlash it got after delisting the JELLY memecoin.
Hyperliquid said “As a demonstration of the primitive, the Hyper Foundation validators 2-5 will vote to delist MYRO perps around 13:00 UTC on March 29. Hyper Foundation validator 1 will abstain from voting until delegations to initial Delegation Program participants are complete,” adding that validators will likely close votes off-chain for clarity. However, the Hyper Foundation does not speak for them.
On March 26, 2025, Hyperliquid experienced a high-profile trading manipulation involving the memecoin JELLY. A trader exploited the platform’s liquidation mechanisms by strategically opening both long and short positions. The manipulation resulted in significant exposure for the Hyperliquidity Provider (HLP) vault. In response, the perp DEX shut down the market, closing the price of the token at about $0.0095, turning the potential loss into over $700,000 profit.
Hyperliquid addresses centralization concerns
The exchange has faced criticism from the crypto community for how it handled the JELLY incident. Earlier in March, the exchange took action against leveraged trading, increasing margin requirements after the HLP lost several millions of dollars in a large Ether liquidation event. Even that move dropped user confidence in its claim of decentralization.
Hyperliquid has faced criticism in the past over centralization concerns. Members of the crypto community have highlighted several issues such as limited transparency, restricted participation, and API access limitations. Also, Hyperliquid controls 81% of the staked HYPE tokens, which the community sees as evidence of centralization.
The CEO of Bitget, Gracy Chen, wrote, “The way it handled the $JELLY incident was immature, unethical, and unprofessional, triggering user losses and casting serious doubts over its integrity,” adding that it could become FTX 2.0.
Blockchain analyst ZackXBT also questioned its governance, pointing out inconsistencies in the platform’s intervention strategies. He noted that while Hyperliquid acted swiftly during the JELLY incident, it had previously claimed its inability to address other significant issues, doubting its commitment to decentralization.
Hyperliquid acknowledged the event and said affected users will be reimbursed. “Technical improvements will be made, and the network will grow stronger as a result of lessons learned,” it added.
The incident led to the exchange’s native crypto HYPE experiencing an 11% price drop.
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