Summary
Ketju does not approve Hyperliquid HLP: Hyperliquid’s Terms bar US persons, and the vault has twice lost money when it took over trades the order book could not close. The Terms define anyone residing, located, incorporated or registered in the United States as a Restricted Person barred from the interface. HLP earns no passive protocol revenue. It runs market-making strategies, supplies USDC in Earn, and takes over liquidations the order book fails to complete. That last role lost about $4M in March 2025, after a trader forced the liquidation of a $271M ETH long. Later that month the JELLY manipulation pushed a losing short onto HLP. It ended only when validators voted to delist the market and set a settlement price. A current prospectus filed with the SEC reports about $13.5M of HLP losses from JELLY. Hyperliquid added margin tiers and walled off the liquidation strategy. The episode also showed that validators can change a market’s outcome under pressure. A four-day lock on deposits means a client cannot withdraw when the risk first appears.
Review triggers
- Hyperliquid publishes terms that let US clients deposit in HLP
- HLP runs 24 consecutive months with no realized loss from its market design above 1% of vault equity
- Validator node software becomes open source, and a published rule with an independent appeal limits emergency market settlements
- Hyperliquid removes the four-day lock after deposits, or adds a verifiable emergency withdrawal for new backstop-liquidation exposure
- Ketju reviews the memo at once if HLP loses money again on a position it takes over in a backstop liquidation
Facts
- Verdict
- Not approved
- Type
- Other
- Chains examined
- Hyperliquid L1
- Reviewed
- Last confirmed