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A trader just pulled off the most galaxy brain DeFi play of 2024, forcing Hyperliquid to choose between a $12M loss or revealing their centralized controls. The outcome? Pure chaos. Here's how this 200 IQ move went down 🧵
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2/ The 4D chess setup: • Spot long + $6M perp short on JellyJelly ($JELLY) • Target: A tiny $20M mcap token • Strategy: Force liquidate own short position • Goal: Make Hyperliquid inherit a toxic position Pure. Evil. Genius.
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3/ What happened next was absolute madness: • Trader pumps spot price HARD • Gets liquidated (intentionally) • $JELLY explodes 429% IN ONE HOUR • $20M → $50M+ market cap • Hyperliquid bleeding millions
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4/ Here's where it gets spicy 🌶️ The trader knew Hyperliquid's HLP would be FORCED to: 1. Take over the short position 2. Keep it open 3. Bleed funding 4. Eventually face liquidation This wasn't a trade. It was financial warfare.
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5/ The potential damage was astronomical: • Initial position: $6M short • Paper losses: $12M and climbing • Nuclear scenario: If $JELLY hit $0.15374, Hyperliquid's entire $230M vault would've been wiped This is what peak financial engineering looks like.
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6/ But Hyperliquid pulled their trump card: Liquidated 392M $JELLY ($3.72M) at $0.0095 Actually made $703k profit Force delisted $JELLY entirely Market price at the time? $0.50 The ultimate "I'm taking my ball and going home" AND making money move.
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7/ This trade exposed everything wrong with "decentralized" perp protocols: • No real size limits on illiquid assets • Weak oracle manipulation protection • "Decentralized" until things go wrong • Emergency powers always ready
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8/ The trader's genius was targeting these exact weaknesses: • Small cap token ✅ • Automated liquidations ✅ • Forced position inheritance ✅ • No circuit breakers ✅ They found every crack in the system.
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9/ This is why I love DeFi. Where else can you watch a trader turn market mechanics into a weapon and force a protocol to either take a $12M loss or show its centralized hand? Follow me @ruguped for more DeFi breakdowns and alpha.
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@ace @kyle @dwr.eth @v @yonfrula @pugson @linda @slokh @0xdesigner @samantha
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