Kanye West YZY Meme Crypto token Vault Facing Short Squeeze: Is YZY USDT Poised for a 10X Surge?

What happens if you enter a trade and can’t escape? It’s like a dream where you’re “stuck.” This is exactly the situation with a rather small Lighter vault. Although crypto prices may have bounced back after the deleveraging on October 10, the Kanye West YZY vault on Lighter remains in distress. The aftermath lingers.

In contrast to Binance, Bybit, and other influential platforms like Coinbase One, perpetual DEXes rely more on their community for competitive advantages. Yes, they offer 10x leverage, and all trades are visible, but without a community fund pool, it can be quite challenging to compete with CEX options.

To address this need, platforms like Lighter, Hyperliquid, and other perpetual DEXes that provide leverage trading have developed vaults. Anyone can contribute funds to these pools and earn a share of the revenue based on trading activity of the pool’s pair. The greater the number of leveraged positions, the higher the vault’s revenue. As of October 14, the Lighter Liquidity Provider (LLP) oversees over $388M, with the Ethereum vault being the largest at more than $11M in position value.

(Source: Lighter)

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Understanding How Perpetual DEX Vaults Function: Who’s More Aggressive?

The Lighter Liquidity vault will persist in offering available volume, consistently placing bids and asks on the order book while maintaining tight spreads and robust markets.

Concurrently, the same pool will manage all liquidations, as whenever a crypto holder faces significant losses, the vault intervenes, serving as a counterparty to protect the exchange from insolvency.

In critical scenarios, such as on Fridays, a vault, like the one in Hyperliquid, can minimize risk by auto-deleveraging, forcibly closing profitable trades to offset losses.

Nevertheless, there were no indications of auto-deleveraging for Lighter. Acting as the last-resort liquidator, the vault intervened, taking the opposing position to avert further losses for both the investor and itself.

In Hyperliquid, risk exposure is minimal, but since Lighter vaults pursue greater yields, they tend to adopt a bolder approach, directly managing liquidations. Auto-deleveraging only occurs when the vault becomes nearly depleted.

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Lighter Vault Behind YZY Meme Crypto token Facing Crisis: The Short Squeeze

Due to this assertiveness and the lack of auto-deleveraging, the YZY vault on Lighter is currently in jeopardy.

Rather than adopting the Jelly Jelly strategy like Hyperliquid to manage risk, the YZY vault has refrained from closing positions and now finds itself significantly in the red, incurring losses from funding rates.

The YZY vault has been trapped since Friday’s catastrophic liquidation event, showing no signs of a quick exit after taking on a substantial short position, just as YZY USDT prices began to recover from the lows of October 10.

Fascinating fallout from Friday night’s liquidation, raising discussions about the distinctions between HLP and LLP…

The Lighter vault seems stuck in a YZY short since Friday evening. LLP comprises nearly all of the OI in the trading market. Even if it attempted to… pic.twitter.com/eC32rE4maI

— Doug Colkitt (@0xdoug) October 14, 2025

Overall, the YZY vault is carrying over $143,000 in bad debt, accounting for nearly half of its current total value of over $321,000. Beyond this loss, the vault is obligated to pay funding, which exceeds $53,000 at present. The longer the vault remains unable to deleverage, the deeper its predicament becomes.

(Source: Lighter)

If the short squeeze persists and YZY USDT begins to rise (particularly if smart traders detect weakness), the vault might become exhausted, prompting it to liquidate all positions.

Top 10 biggest gainers – 14 Oct 2025 at 1.30pm UTC @Lighter_xyz

– while the trading market struggles to recover, some tokens are experiencing surges, $MYX rose 12.62%

– $SYRUP increased by 8.16%, what’s going on? I placed a long position on this a few hours ago, but it’s still far from my target price

– $YZY what’s happening here? pic.twitter.com/aNr9AV6XYr

— compoundo (@compound0x) October 14, 2025

How Lighter navigates this challenge is yet to be determined. Currently, attention is focused on this small vault, offering valuable lessons, assuming the vault holds $100Bn in prominent altcoins, where the risks of auto-deleveraging could jeopardize the exchange.

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The post Kanye West YZY Meme Coin Vault On Lighter Facing Short Squeeze: Will YZY USDT 10X? appeared first on 99Bitcoins.