Is Hyperliquid HLP Safe?
Risk Grade: C (47/100)
Hyperliquid HLP is rated as elevated risk — multiple novel mechanisms and notable interaction risks.
Elevated risk — novel vault mechanics with demonstrated exploitation history, partially offset by strong trading volume and aggressive fee-funded buyback program.
Hyperliquid HLP is the protocol-owned market-making vault on Hyperliquid, a custom L1 perpetual futures exchange with $374M in vault deposits and ~$30B FDV. Its C+ grade reflects novel vault mechanics that automatically inherit liquidated positions across all markets, the March 2025 JELLY manipulation incident, and centralization concerns around a small validator set that can delist tokens and settle positions within minutes.
TVL
$424M
Mechanisms
6
Interactions
5
Value Grade
B
Key Risks for Hyperliquid HLP Users
The HLP vault automatically takes over positions from liquidated traders, including on illiquid tokens. In March 2025, a trader manipulated the JELLYJELLY token price and forced the vault to absorb $12M in losses before validators intervened by delisting the token.
Hyperliquid runs on its own custom blockchain with approximately 20 validators who can make rapid emergency decisions, including delisting assets and settling positions at chosen prices.
HLP depositors are exposed to all perpetual markets listed on the platform simultaneously with no per-market isolation.
Top Risk Factors
- •HLP vault automatically inherits liquidated positions, including illiquid tokens where market manipulation can force the vault to absorb outsized losses — as demonstrated in the March 2025 JELLY incident where the vault faced $12M in unrealized losses.
- •The protocol's validator set is small (~20 validators), enabling rapid consensus actions like delisting tokens and settling positions at arbitrary prices within minutes, raising centralization concerns around emergency interventions.
- •Socialized loss mechanism means HLP depositors bear counterparty risk from all perpetual trading on the platform, with no per-asset exposure caps limiting concentration risk on illiquid listings.
- •Custom L1 chain with proprietary consensus means the entire derivatives stack runs on infrastructure that has not been independently replicated or battle-tested by other protocols.
Risk Score Breakdown
Hyperliquid HLP's highest risk area is Scale Exposure (10/10). Here's how each dimension contributes to the overall 47/100 score:
Read the Full Hyperliquid HLP Risk Report
This protocol has 2 collapse scenarios. 1 critical and 1 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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