Hyproliquid is a decentralized derivatives trading platform (DEX derivatives) that has been attracting attention in the Defi ecosystem due to its unique operational model, transparent governance, and in-depth integration of security and risk management mechanisms.
Microfiber Flowability Model (HLP)
Hyperliquid Provider (HLP) is a hyperliquid shared liquidity vault funded by the community to execute marketing and liquidation strategies on the platform. Anyone can deposit USDC into HLP and earn profits or bear losses proportional to their contributions. HLP is the main counterparty for most orders on the platform, similar to how GLP operates on GMX, but with a more aggressive and adaptive approach.
HLP does not charge any management fees; all profits and losses are all allocated to depositors because the vault is entirely owned by the community.
In practice, HLP is structured into several sub-investment libraries, each implementing a different strategy. Specifically, there are two vaults of interest (called Vault A and VAULT B) and one vault designated for liquidation (the liquidator library). Vaults A and B place purchase/sell orders continuously to provide liquidity to the order book, while the liquidator custodian handles the positions being liquidated.
Learn more: What is a hybrid?
HLP shows the net position summarized in all three sub-resource repositories. For example, if Vault A is $100 million ETH, Vault B is $200 million long, and liquidator is $300 million, then the total net position of HLP will be zero, as long positions and short positions offset each other.
HLP Performance
HLP has generally remained profitable since its launch – thanks to its marketing strategies and transaction fee revenue. By the end of 2024, HLP vaults had reached about $350 million in total locked value (TVL) and accumulated about $50 million in profits, reflecting a consistent APR.
HLP tends to maintain a net short head in the 2023-2024 bull market, which allows it to provide stable returns even as asset prices rise.
HLP’s performance has remained profitable since its launch – Source: Hyper-Flower
However, HLP is not without risks. Due to unexpected market fluctuations, the vault has recorded huge losses several times.
Jelly and hard lessons
One of the most famous events occurred in late March 2025, involving a brief squeeze of token jelly. A trader opened a short position worth about $8 million on the jelly and then continued to buy tokens on a diversified exchange (DEX), causing a sharp rise in prices. As a result, the shorter location is cleared and transferred completely to the HLP library.
Read more: Review of price manipulation in super liquidity
The price of Dexs on Jelly surged by several percent, pushing HLP toward unrealized losses of more than $10 million.
Faced with the risk of a $230 million vault losing a small memory, the team took a quick action: They downgraded the jelly and set the mandatory liquidation price at 0.0095 USD, exactly where the attackers initially opened up the brief level.
However, the move has sparked widespread controversy over the dispersion and transparency of hyperliquidity. Many people think this is actually a “validator’s bailout” (or “Verification put”) – a” When the vault hits too hard, the network gradually loses network losses. This raises concerns that high liquidity may be willing to cover the market mechanism to protect HLP’s capital, which may be at the expense of other users.
In response, Hyperliquid upgraded its blockchain to include on-chain validators’ votes on future asset talk shows – a step towards blocking manipulation. Nevertheless, there are still problems with the platform’s commitment to true decentralization.
Super-liquid risk management measures
Following the jelly incident, Hypliquid implemented a series of risk management upgrades to prevent similar situations in the future. A significant change involves reducing the portion of HLP capital used in liquidation strategies. The team sets this allocation to a fixed, well-defined amount and reduces the frequency of rebalancing of the liquidation library to help limit potential losses during major liquidation events.
In addition, hyperliquidity introduces a loss threshold and automatic drive (ADL). The system automatically triggers deleveraging when the liquidation policy loss exceeds a specific threshold. Once the loss reaches the limit, the protocol activates ADL, which borrows unrealized profits from other traders in the same asset pair to cover the deficit.
To further improve stability, the platform also adopts a dynamic open interest (OI) cap. The platform adjusts these caps based on the liquidity and market capitalization of each asset, thus imposing stricter restrictions on low-hat tokens. This measure helps prevent a small number of traders from opening up oversized positions that may distort market depth and introduce systemic risks.
Source: ASXN
These recent improvements reflect the awareness of hyperfluidicity to the vulnerability exposed by jelly attacks and its commitment to establishing a more resilient system. HLP shares profits with users, but requires strong risk control under turbulent market conditions.
A recent example highlights the evolving governance and risk management practices of hyperliquidity, which is recommended by Myro forever. On March 29, 2025, validators 2-5 voted for Delist Myro due to low liquidity and manipulation risks.
ASXN supports are due to low volume, insufficient liquidity and thin order books across CEX, DEX and hyperliquidity. These conditions make Myro extremely vulnerable to price manipulation and pose unnecessary risks to HLP
Communication supports hype and liquidity
After its token release, Hyprolicid quickly attracted great attention from the cryptocurrency community. The hype jumped 60% in half a day to drop to $6, close to $2B in market cap.
Source: Coingecko
After connecting the wallet, the user exchanges the USDC directly on the super liquid DEX.
In the weeks after the airdrop, several centralized exchanges in the middle level began to list hype, further expanding their liquidity. Kucoin is the first CEX to implement hype, withdrawals and transactions (starting from December 7, 2024). Today, exchanges such as Kucoin, Gate.io, Bitget, Lbank and Coinw illustrate the highest trading volumes of hype.
learn more: Why hyperflow does not need to be listed on binary
Although there is no binary list, hype will actively trade under strong community interest following the major airdrop. After the jelly incident, Hype caused strong fluctuations in profits and consequences in its early stages. However, in recent weeks, prices have shown signs of stability.
in conclusion
Hyperliquidity gains appeal in Defi through community-supported liquidity and strong active risk control. The HLP vault generated output, but the jelly incident exposed the difficult trade-off between user safety and decentralization.
The rapid upgrade of the Layer 1 permanent DEX and the strong debut of HYPE show that the long-term potential of the protocol increases trust.
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