Hyperliquid’s JELLY exploit could happen to other DeFi protocols, expert warns

An Oak Security expert explained what happened with the feat of jelly token, which cost $ 10.63 million to hyperliquid exchange.

The reactions are still rising from a feat that costs hyperliquid (THRESHING) Exchanges users of $ 10.63 million in losses. The reactions seem to have one thing in common, which calls for hyperliquids to its practices.

Dr. Jan Philipp Fritsche, managing director of Oak Security, shared his analysis with Crypto.News. According to Fritsche, the feat was not caused by a bug, but was rather a foreseeable failure, which could also present a risk for other DEFI protocols.

The feat of jelly seems to be the result of a coordinate market manipulation by several users. More specifically, a merchant has opened a short position of $ 5 million on Jelly, only to eliminate his margin. The hyperliquid was left by holding the position, after which other traders coordinated a short pressure.

“The attacker opened massive opposite positions in the jelly, knowing that a side would collapse and that the other would rest. Because the payments were not capped and the risk was not isolated, the protocol ate the loss – and the attacker left with millions of people “, Dr. Jan Philipp Fritsche, employment

Fritsche described the feat as an “example of a risk manual of Vega not taken”, a concept of traditional finance which refers to the implicit volatility of an active. He stressed that many protocols DEFI still do not take into account this crucial risk metric.

Hyperliquid under fire for the exploitation of the jelly

This is not the first time that industry figures have criticized the hyperliquid on the jelly incident. After the feat, the CEO of Bitget, Garcy Chen, described the practices of exchange “immature, contrary to ethics and not professional”, warning that he could Become FTX 2.0.

Although hyperliquid has committed to compensating for users affected by the feat, damage to its reputation can already be caused. More importantly, the feat drew attention to broader vulnerabilities in the decentralized financial sector.

In 2024, DEFI exploits cost users for $ 308.7 million in losses. It was more than carpet prints, which explained $ 192.9 million. Only a few days after the operation of the jelly, a protocol of Defi Sir. $ 355,000.