Hyperliquid co-founder responds to concerns about protocol security: leverage system and HLP liquidation mechanism have been updated.

BlockBeats news, on April 5th, Hyperliquid co-founder @chameleonjeff responded on X to concerns that the “Hyperliquid protocol may suffer significant losses due to market manipulation”: “Hyperliquid’s margin design rigorously ensures the platform’s solvency through mathematical mechanisms, and losses of HLP are always limited to its own treasury, with the protocol’s operation never relying on HLP—this feature existed even before the JELLYJELLY incident. The newly added protection mechanisms after the incident only optimize HLP’s risk resistance in backup liquidation, and the underlying architecture of the protocol has not changed. In the recent JELLYJELLY incident, an attacker attempted to manipulate HLP (liquidity provider pool) by establishing a huge long and short position against themselves. Although the position limit for unliquidated contracts allowed a position worth 4 million USDC to be established at that time, the logical flaw was that HLP used its entire fund balance as collateral for this liquidation. It should be clarified that the platform itself does not have solvency risk, but HLP indeed faced excessive risk exposure due to market manipulation.” "Currently, HLP’s liquidation component treasury has set a collateral limit, which restricts potential losses through the backup liquidation mechanism. Hyperliquid still maintains its original operating mechanism, processing under-collateralized positions in the following order: 1) Market liquidation 2) Backup liquidation 3) Automatic deleveraging (ADL). The current HLP’s backup liquidation has added protection mechanisms that set loss limits, making the cost of manipulating the mark price much higher than the limited gains that can be obtained from HLP.