Mark Price: The Achilles' Heel of the Perptual Futures Market

In the world of cryptocurrency trading, the mark price has always been regarded as an impartial judge. However, the Jelly-My-Jelly incident that occurred in March 2025 exposed the fatal flaws in this system. This turmoil not only caused significant economic losses but also sparked profound reflections on the core mechanisms of the Perptual Futures market.

The Core Paradox of Perpetual Futures: The Risks Behind the Sense of Security

The calculation of the mark price is usually based on the index price, using a three-value median mechanism. This design was originally intended to provide a stable and reliable price reference. However, in the illiquid altcoin market, this mechanism has instead become a tool for attackers.

The liquidation engine is designed to protect the platform, but its triggering logic overly relies on the mark price, which may lead to adverse outcomes for traders, such as premature liquidation and capital going to zero in extreme cases. Even more concerning is that the interests of the platform and users during the liquidation process may not align.

Oracles: The Fragile Bridge Between On-Chain and Off-Chain

Oracles serve as the information bridge between the blockchain world and the real world, and their reliability directly impacts the security of the entire DeFi ecosystem. However, even oracles that are functioning normally may convey incorrect information due to manipulation in external markets, leading to severe consequences.

The Mango Markets incident in 2022 is a typical case. The attacker successfully manipulated the price of the low liquidity MNGO token to contaminate the oracle data, ultimately causing the platform to lose over 100 million USD. This type of attack does not require system intrusion, but merely exploits the weaknesses in the existing mechanisms.

Hyperliquid: Innovation and Risk Coexist

The HLP treasury design of the Hyperliquid platform is innovative, but it also brings unexpected risks. As a unified market maker and clearing counterparty, HLP may become an ideal target for attackers in extreme market conditions.

The platform's clearing mechanism has structural flaws. Due to the lack of strict isolation between the funds pools, the ADL mechanism failed to trigger in a timely manner, causing risks that should have been dispersed to concentrate and erupt in the HLP vault.

Jelly-My-Jelly Attack Incident Review

On March 26, 2025, attackers meticulously planned an attack on the JELLY token. They first established a large number of short positions on Hyperliquid, and then simultaneously inflated the JELLY spot price across multiple exchanges. This action quickly contaminated the oracle data, triggering a chain liquidation within the platform.

Due to the forced takeover of the HLP treasury, the attacker successfully shifted their losses onto the platform and other users. The incident ultimately resulted in significant losses for the HLP treasury, and Hyperliquid was forced to urgently delist the JELLY contract.

Reflection and Outlook

The Jelly-My-Jelly incident reveals the deep-seated issues in the mechanism design of the current Perptual Futures market. Although the mark price seems reasonable mathematically, it may become a tool for arbitrageurs in the actual market.

In the future, DeFi platforms need to reassess their pricing mechanisms and risk control systems, enhancing their ability to withstand extreme market behaviors while ensuring efficiency. Only by truly understanding and addressing these potential risks can the Perptual Futures market achieve long-term stable development.