Warpcast

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 🧵

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.

Defi educator, rugpull survivor. Community Ambassador /aleo

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

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.

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.

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.

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

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.

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.

@ace  @kyle @dwr.eth @v @yonfrula @pugson @linda @slokh @0xdesigner @samantha