The Hydro -Complicancia Supplier (HLP), a market manufacturing vault that is part of the derivative exchange hyperlichid, faced an exhausting loss after a merchant allegedly manipulated the price of the gelatin token.
Hyperliquid’s native token (hype) fell 20% after HLP -unrealized NLP did not stand temporarily at $ 13.5 million negative.
According to Lookonchain, an operator who had $ 4.85 million of the gelatin form combined a short operator in hyperlichid with spots purchases in the chain, this liquidated the position in hyperlichid and essentially meant HLP inherited that short position.
HLP is a bot of the automated market that is linked to the exchanges liquidation engine.
Then, the merchant aggressively bought the gelatin in the spot exchanges, pushing the price and temporarily causing the unrealized loss of HLP at $ 13.5 million. Liquidity in decentralized exchanges is minimal, so the mobile price is relatively easy compared to hyperlichid.
Then, in an attempt to minimize losses, hyperlichid seemed to force the closure of the gelatin market, solving it at $ 0.0095 instead of $ 0.50 that fed oracles through decentralized exchanges.
“After the evidence of the suspicious activity on the market, the validator set convened and voted to eliminate the gelatin perps,” Hyperliquid wrote in X. “All users, apart from the marked addresses, will be made complete from the Hyper base. This will automatically be done in the next few days based on chain data.”
The Newfound Research CEO, Corey Hoffstein, questioned the legality of Hyperliquid’s actions as social networks descended to indignation. The merchant who manipulated the gelatin market ended with a small loss.
The Hyperliquid delisto led another player to enter the mixture: Binance. The greatest exchange of cryptocurrencies by negotiation volume saw an opportunity and announced that it listed futures linked to the gelatin, which caused spot prices to fire in 560%.
The case extracts similarities with an exploit that occurred in the mango markets in 2022, where a merchant named Avraham Eisenberg created a “highly profitable commercial strategy” that involved manipulating the prices of the oracles to ensure gain in derived markets.
