Yesterday, a wallet funded from Aster may have attempted to attack Hyperliquid. . It belongs to a cluster that withdrew $2.3M from Aster one week ago. 20h ago, the wallet deposited $635K into Hyperliquid and started longing Fartcoin. Address: markets.xyz/trader/0x4be6937… Four hours later, the position had reached $7.1M notional, which was almost 20% of the entire open interest in that market. The setup was familiar: Step 1: Open a huge share of OI on a low-cap token. Step 2: Buy spot to push the price up. Step 3: Try to force a backstop liquidation. Step 4: Make HLP take over the position. Step 5: Then dump the spot, leaving HLP stuck with a large long and a large loss. That appears to have been the plan, but this time, it failed hard and couldn’t even reach the step 2. After pushing the price up longing non-stop for 4 hours, the wallet got fully liquidated and lost $540K on the trade. HLP took over the position, closed it and ended up taking only around $130K in losses. The entity behind the cluster remains anonymous.

Coinbase is now the official deployer of @HyperliquidX's USDC treasury wallet. We will be activating AQAv2 from the two addresses below: 0x4E5319dEb1072B01439EE674db5C321d11fd96F8 0xc20699185c15D0a2fD65779BB5d69f5b0B113c00

15 hours ago, the team unstaked 18.88M hyperliquid:native, worth approximately $1.14B, and redelegated it across 11 validators.

hyperliquid is a killer product meanwhile, there are pressures that may constrain the project’s viability within US borders including: - hyperliquid’s product layer (via CFTC’s kalshi approval, coinbase/deribit no action, and policy statement) - hyperliquid’s network and token layer (via clarity act) - hyperliquid’s collateral layer (via USDC, managed by circle/coinbase, two US regulated entities) haven’t seen a thorough discussion on these impacts, so below is a brief summary of the current paths forward, and the rationale behind each: (1) hyperliquid can ignore US market, go offshore only (2) hyperliquid can build a US regulated wrapper (3) hyperliquid can decentralize under ‘clarity act’ (4) hyperliquid can centralize the project, turn $HYPE into a security (5) hyperliquid can lobby for a change these are the five, i'll start with the first (1) hyperliquid can ignore US market, go offshore only last week the CFTC approved kalshi’s BTCPERP as a futures contract on a DCM the CFTC separately confirmed certain deribit perps may be treated as foreign futures through the coinbase FCM path the implication is that regulated distributors for perps in the US may need a fully regulated venue, compliant customer funds path, approved product scope, surveillance, disclosures, and accountable corporate counterparties without these in place distributing hyperliquid liquidity, or offering hyperliquid perps, could look like routing US customers into an unapproved offshore venue so the first option for hyperliquid is that they ignore the US market entirely this approach would be similar to binance main exchange, which was ultimately forced to more aggressively block american customers after years of light effort like binance, doing so would preserve hyperliquid’s product offshore, but cede US institutional access for the time being (2) hyperliquid can build a US regulated wrapper the second path is to find a way to build or partner with a US regulated wrapper to offer perps under this path, offshore hyperliquid would remain a global crypto native venue, while a separate US affiliate or partner offers regulated perps through an FCM/DCM/DCO/FBOT style wrapper you can think about this separate venue like Hyperliquid US™ in a perfect world, this is the ideal outcome for hyperliquid to target US users however, this approach would likely require hyperliquid to ring fence (1) customer funds, (2) products, and (3) $HYPE value capture separate from the main network the ongoing separation of Binance US™ from Binance’s main exchange is instructive here as a case study - customer funds may be ring fenced because US regulated futures infrastructure cannot commingle US customer collateral with offshore protocol margin - products may be ring fenced because the US venue will likely require approved, deep, liquid digital commodity perps, not the entire hyperliquid long tail universe of assets - revenue and $HYPE value capture may be ring fenced because profits from a regulated corporate venue flowing into buybacks, burns, or assistance fund mechanics starts looking like token holders are economically participating in the profits of a corporate operating business, which could implicate US securities laws net net, this model would likely require a significant rewrite of how the hyperliquid network works for US participation (3) hyperliquid can decentralize under ‘clarity act’ the clarity act drafts offer a groundbreaking path for a lot of protocols to ‘progressively decentralize’ a network i'll be writing more on this down the road but for now under clarity, progressive decentralization means reducing the role of the originator / related parties until the network and token are no longer under ‘coordinated control’ in exchange, a token may exist to capture *automatic* revenue flows originating out of the decentralized network, as long as the token value is primarily driven by the distributed ledger system rather than entrepreneurial or managerial efforts by a control group in a vacuum, a token powering a decentralized network may support shifting the token’s classification from “security” to “commodity” which is a big deal for many protocols and networks in the US however, there are tradeoffs for projects optimizing for the ‘decentralization’ route for hyperliquid, decentralization under clarity would likely mean the project would need to aggressively broaden validators, decentralize the listing process, decentralize oracle/risk controls, reduce controlled ownership, reduce emergency discretion decisions, make upgrades slower and more governance driven, among offloading other day to day product decisions this would be a meaningful change, as a large part of the hyperliquid thesis has been underwriting the core team’s ability to make fast product decisions, in a manner they see best ceding managerial control over the protocol to satisfy decentralization changes the trajectory of the project, and shouldn’t be taken lightly this also coincides with a separate issue the clarity act’s decentralization framework is not a DCM/DCO workaround. even if the hyperliquid network could eventually satisfy clarity’s decentralized governance framework, this would still not automatically permit hyperliquid to offer perps directly to US users notably, both clarity and the ag committee text for clarity preserve the existing commodity exchange act (CEA) regime for futures, swaps, options, and leverage transactions this is important for understanding clarity's intent, as the ag committee writes the CFTC/CEA side of market-structure legislation and this text signals that clarity act legislation is not a workaround for the existing CEA derivatives regime simply put this likely means any decentralization for hyperliquid will *not* erase the need to follow regulated derivatives market infrastructure without a regulated wrapper, which would require a significant rewrite of how hyperliquid works for US participation (4) hyperliquid can centralize the company, turn $HYPE into a security this is probably the weakest option game theoretically, but worth mentioning hyperliquid could become a corporate exchange, register or restructure $HYPE into a security, build a regulated wrapper, and shift value capture away from token buybacks/burns and toward equity, licensing, or regulated-entity revenue this is the cleanest for compliance because the entity, venue, governance, customer funds, disclosures, and revenue flows become legible to US regulators *today* but it is the most damaging to the network value prop, which relies on the idea that protocol activity, incentives, and economics are all aligned around $HYPE as a digital commodity, not a tokenized security (5) hyperliquid can lobby for a change there is a fifth option, which is to lobby for a change here, related organizations could work hard to lobby the agencies to eventually create a bespoke framework for crypto-native perp venues like hyperliquid to directly target US audiences and capital the work being done here by @HyperliquidPC is instructive there is some evidence this approach could work in part the CFTC is clearly moving in a more innovative direction, and the kalshi / coinbase-deribit path may be the first conservative step before more liberal steps to include more unique design architectures important to consider, however even if the CFTC further opens up on perps to tailor approvals for decentralized networks this wouldn’t solve a $HYPE securities classification under the clarity act, which is a separate issue that may require network changes before US participation without these changes and under a current reading of clarity i do find it impractical to think there will be a special token exemption for one project, while other projects are required to satisfy clarity act’s decentralization / network token framework ok in closing these are the five US options as i currently see it, i'd be curious if folks in the legal / policy community are seeing others there is also one final wrinkle, which is USDC now serving as hyperliquid’s ‘aligned quote asset’, with coinbase/circle tied into the broader treasury and routing strategy a final point on this if hyperliquid’s core settlement asset is USDC, then the system unquestionably inherits some degree of US regulatory control at the asset layer but it also opens up a unique opportunity for significant policy shifts to support extending USD dominance, as flagged by @blknoiz06 its an interesting dynamic worth keeping an eye on for policy reasons i hope some of this discussion is useful for further dialog as of today whether you are bullish or bearish on hyperliquid’s US efforts from here probably depends on two things: (1) what probability you assign to each of these paths; and (2) hyperliquid’s ability to compete once they end up on one of these paths disclosure: my fund @collab_currency currently has exposure to $HYPE and projects building in the hyperliquid ecosystem