Hyperliquid against Binance and OKX: JELLY Trading Elevates HYPE and DeFi

The ongoing Hyperliquid JELLY coin story involving Binance and OKX listings stirs the Decentralized finance and crypto trading landscape. HYPE experiences a 10% decline—what lies ahead?

Conflicts are commonplace in the crypto sphere, and yesterday, the action was centered on Hyperliquid, a well-known decentralized futures trading platform, as it faced off against Binance and OKX—two of the leading centralized exchanges seeking to uphold their dominance in crypto perpetual trading.

What’s Happening with JELLY and Hyperliquid?

The crux of this issue revolved around a low-market-cap Solana meme crypto token, JELLY, which surged by over 300% in mere hours, nearly resulting in a disastrous $230 million liquidation for Hyperliquid.

This two-day episode, commencing on March 25, unveiled weaknesses in the DeFi space, particularly with Hyperliquid—which has encountered controversies before—and prompted more inquiries about the authenticity of decentralized protocols’ claims of decentralization.

Hyperliquid strives to revolutionize how crypto traders execute trades without relying on centralized platforms. The protocol operates on its own layer-1 chain, achieving remarkable speed with the capability of processing tens of thousands of transactions per second. This takes place in a low-fee environment, featuring a user-friendly interface that competes with platforms like Binance, Coinbase, and Bybit.

Over recent months, Hyperliquid has amassed over $1 trillion in trading volume, occasionally hitting more than $2 billion in average daily volume. Its unique feature is designed to maintain market fluidity by adopting passive positions, compensating market fluidity providers from its earnings and through liquidations.

Understanding the Crisis: What Caused Hyperliquid’s Downturn?

The structure of the platform became pivotal in this crisis when one unscrupulous investor took action on March 25.

By targeting the JELLY vault on Hyperliquid, the investor liquidated 124.6 million JELLY valued at approximately $4.85 million, which led to a crash in prices and compelled the vault to assume an enormous 398 million JELLY short position worth $15.3 million.

(Source)

As the trader shorted JELLY on Hyperliquid, he concurrently took a long position on Binance, causing it to surge from $0.0095 to $0.050, marking a 426% increase. This price spike on Binance instigated a short squeeze on Hyperliquid, resulting in a $12 million unrealized wrecked for the vault and liquidity providers on the protocol.

(JELLYUSDT)

Had JELLY’s prices continued to rise, potentially hitting a market cap of over $150 million, the JELLY vault on Hyperliquid could have faced liquidation, resulting in considerable losses.

Did Binance and OKX Aim to Undermine Hyperliquid?

Binance and OKX appeared to benefit as Hyperliquid was managing this evident price manipulation, since they listed JELLY on their perpetual futures platform, likely increasing distress for available volume providers on Hyperliquid.

Following the listing, JELLY prices increased, reaching a crypto market cap of $50 million before retracting to around $25 million.

Nonetheless, Hyperliquid decisively responded to this crisis.

Its validators not only voted to delist JELLY perpetual but also exited all positions at $0.0095—the price at which the short seller had made his significant short entry. This action transformed a $12 million unrealized wrecked into a $700,000 profit.

(Source)

Hyperliquid also announced its intention to reimburse liquidity providers, except for those engaging in price manipulation. While this was a welcomed move, HYPE prices fell significantly, decreasing 10% within 24 hours, according to Coingecko.

(HYPEUSDT)

HYPE Declines Amid Rising Questions

The sell-off was partly influenced by a strong community backlash.

Arthur Hayes, the co-founder of BitMEX, criticized Hyperliquid as being centralized. He predicted that HYPE would underperform relative to some of the top Solana meme coins to buy in 2025.

$HYPE isn’t able to cope with $JELLY

Let’s cease pretending that Hyperliquid is decentralized

And stop pretending that traders actually care

Wager you $HYPE will return to its starting point shortly because degens will be degens

— Arthur Hayes (@CryptoHayes) March 26, 2025

In contrast, Bitget’s CEO labeled the JELLY delisting as “immature, unethical, and unprofessional,” warning that this could signal the onset of a new FTX 2.0 trust crisis.

#Hyperliquid might be on the path to becoming #FTX 2.0.

The manner in which it dealt with the $JELLY situation was immature, unethical, and unprofessional, resulting in user losses and casting significant doubt on its integrity. Despite its claims of being an innovative decentralized exchange with a…

— Gracy Chen @Bitget (@GracyBitget) March 26, 2025

Nevertheless, Hyperliquid advocates accused Binance and OKX of exacerbating volatility and capitalizing on the platform’s turmoil.

The timing of the JELLY listing appeared too coincidental. Onchain investigations reveal the crypto holder transferring funds from Binance, OKX, and MEXC.

Additionally, Hyperliquid acted promptly, liquidating the short at the entry point thereby mitigating risks and shielding its users from a potential $230 million liquidation.

The HyperLiquid $JELLY incident serves as a lesson for on-chain DEXs replacing CEXs, highlighting the need for increased resilience to address such situations.

Unlike many critiquing HL right now for its handling of the crisis, I actually stand behind their decision. Some might label it centralized, but… pic.twitter.com/6bbfTG7M3c

— Elite Crypto (@TheEliteCrypto) March 27, 2025

A user on X stated this was not a violation of DeFi principles but an instance of “effective crisis management.”

BREAKING: HYPERLIQUID TURNED A $12M CRISIS INTO A PROFIT

This wasn’t merely a liquidation—@HyperliquidX converted a disaster into profit while @binance found itself caught in the fallout.

Were you an crypto holder? Discover why this is one of DeFi’s most contentious moves. pic.twitter.com/d1lJ9Vhhum

— trippie₊ (@kriqtay) March 27, 2025

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The article Hyperliquid vs. Binance and OKX: JELLY Trading Disrupts HYPE and DeFi first appeared on 99Bitcoins.