Strict risk control, transparent decision-making mechanisms, and robust liquidity management are not just embellishments, but the foundation for project survival.
Source: aminagroup
Translation: BitpushNews Yanan
April 2025 was an unsettling month for the cryptocurrency market. At the beginning of the second quarter, things seemed calm, but soon a series of unexpected events unfolded. These incidents exposed the fragile nature hidden behind some of the most ambitious projects in the industry. In this article, we will delve into the latest on-chain dynamics: from sudden price crashes to more concerning underlying issues— the practical state of decentralization ideals, the effectiveness of risk management, and the real operation of protocol governance.
The Unexpected Collapse of Mantra
On April 13, 2025, the benchmark project in the tokenization of real-world assets, Mantra, experienced a dramatic price crash. Its token $OM plummeted from $6 to $0.6 in just a few minutes, an astonishing 90% drop that wiped out $5.5 billion in market value in an instant. This collapse not only severely impacted market sentiment but also exposed deep-seated issues within the project's operations, even calling into question the viability of the entire RWA (real-world assets) sector.
As a pioneer in bringing traditional assets like real estate and bonds onto the blockchain, Mantra had garnered favor from both institutional and retail investors, and its growth momentum seemed unstoppable. However, beneath the shiny surface, hidden dangers had long been buried—most critically, the contradictions centered around the token distribution mechanism of $OM.
The project initially promised to issue 50 million tokens with a phased unlocking plan but quietly adjusted it to a daily release of 0.3% with an extended vesting period lasting until 2027, without adequate communication. While the team claimed this was to maintain long-term stability, community members generally felt left in the dark: they had not participated in key decisions and were increasingly confused about the project's actual development direction.
The trigger for the collapse was ignited in the Binance futures market. Within seconds, a series of large short orders flooded in, creating immense selling pressure on the price of $OM. Liquidity on other platforms like Bybit and OKX began to dry up almost simultaneously—among them, a trader on OKX, later dubbed the "OM whale," further pushed down the price with consecutive large sell orders, completely igniting market panic.
On-chain data revealed even more disturbing signs. A whale wallet that had held tokens for over a year suddenly began transferring large amounts of $OM to exchanges. While a single transfer might not be unusual, its timing resonated terrifyingly with the exchange sell-off, accelerating the market's loss of control.
Ultimately, nearly 4 million $OM were concentratedly sold off in a short time, triggering a chain liquidation that completely shattered the last line of market confidence. This seemingly organized sell-off quickly evolved into a full-blown collapse, causing the community's trust in the project to crumble.
The collapse of Mantra served as a heavy lesson for the industry: rebuilding a new order on top of the traditional financial system requires a more rigorous structure than imagined. Although the prospects for real asset tokenization remain vast, this incident clearly indicates that projects must possess true transparency, fairness, and resilience against extreme market fluctuations. Without these foundations, even the most beautiful visions can turn to dust in an instant.
The Governance Turmoil of ArbitrumDAO
A recent farce at Arbitrum DAO has exposed the vulnerabilities of decentralized governance. A user named hitmonlee.eth acquired voting rights for 19.5 million ARB tokens worth $6.5 million by spending only 5 ETH (approximately $10,000) through the Lobby Finance platform. This platform, which specializes in delegating voting rights, inadvertently opened the door to governance loopholes.
With substantial voting power in hand, the user immediately supported community member CupOJoseph's candidacy for a seat on the DAO Oversight and Transparency Committee. While exchanges of interests in governance games are not uncommon, the peculiarity of this event lies in the fact that such a large-scale voting power could be bought at such a low price. This discovery immediately caused an uproar in the community and forced people to reassess the true value of the so-called "decentralization" in on-chain governance.
In response to the criticism, Lobby Finance defended its model, emphasizing that the platform aims to promote governance transparency and broad participation. However, the platform also admitted that the existing mechanism has flaws and acknowledged the need to establish stricter protective measures to prevent potential abuse. This statement sparked even greater waves within the community—debates about the direction of governance reform continued to ferment: some members advocated for a direct ban on acquiring voting rights through financial transactions; others proposed establishing a "safe passage" mechanism, requiring funds to flow through trusted channels to allow for timely intervention upon discovering violations.
Now, decision-making power rests entirely in the hands of the community. The Arbitrum Foundation has made it clear that it will not intervene in voting transactions administratively but will leave it to the community to decide the future direction: should purchasing voting rights with funds be allowed? How should obvious manipulative behaviors be punished? Or should such transactions be viewed as an inevitable market behavior in decentralized governance?
This debate points to a more fundamental issue: the inherent flaws of the "one token, one vote" governance model. This incident has laid bare these structural weaknesses. To truly solve the problem, what is needed is not superficial adjustments but a fundamental reconstruction of power distribution and decision-making mechanisms within the Arbitrum ecosystem.
The Crisis Moment of Hyperliquid
Since its launch, Hyperliquid has frequently encountered security crises, and an event that occurred a few weeks ago nearly pushed this derivatives trading platform to the brink.
In January of this year, a whale established a leveraged position of up to $300 million on ETH. After the trader withdrew $8 million in unrealized profits, the liquidation threshold was quietly raised. When the market reversed, Hyperliquid's insurance pool—composed of funds deposited by users into the HLP treasury—was forced to take over the position, ultimately suffering a loss of about $4 million. This incident exposed serious flaws in the platform's risk management, but at the time, few realized that this was just the beginning of the crisis.
The real storm arrived on March 26, when a game surrounding the obscure meme token JELLY nearly destroyed the entire protocol. This meticulously designed attack was textbook-level:
The attacker deposited $3.5 million USDC and shorted JELLY, which had a market cap of only $10 million, hitting the platform's leverage limit.
Another whale holding 126 million JELLY simultaneously sold on the spot market, causing the price to plummet.
The attacker quickly withdrew most of the margin, creating an under-collateralization.
Hyperliquid's automatic liquidation system was forced to let the HLP treasury absorb a short position of 398 million JELLY.
The attacker then aggressively repurchased JELLY on CEX, driving the price up by 300%.
As the price of JELLY soared, Hyperliquid faced over $10.5 million in unrealized losses. Even more frightening, if the price reached $0.16, potential losses could balloon to $240 million.
Just as Hyperliquid was mired in crisis, mainstream exchanges like Binance and OKX suddenly launched JELLY perpetual contracts, unexpectedly adding a dramatic twist to the farce. This move was interpreted by some observers as an intentional effort to drive up prices and weaken Hyperliquid's market position. But the real turning point came 26 minutes earlier—Hyperliquid's validator committee had voted to delist JELLY. Ultimately, the price of JELLY miraculously returned to the shorting starting point, and the HLP treasury not only avoided catastrophic losses but also gained $700,000.
This thrilling escape came at a heavy price for Hyperliquid: to preserve the protocol, its proud decentralized architecture was temporarily set aside, exposing the fact that centralized mechanisms still play a crucial role in crisis management.
The incident revealed a harsh reality: Hyperliquid must thoroughly reinforce its system. Although the upgrade costs are high—requiring the use of treasury funds—this investment is essential for building long-term resilience. Current platform activity indicators show that it is working in this direction, but no system can claim to be perfect. Attackers will always be on the lookout for vulnerabilities, as evidenced by the JELLY incident.
Although the timely decision to delist JELLY avoided greater losses (even achieving a net gain), the decision-making process—executed quickly by a few validators and using non-market price settlements—once again raised questions about the platform's level of decentralization.
Hyperliquid may have temporarily weathered the crisis and even shown a slight surplus on paper. However, if it cannot fundamentally patch the vulnerabilities and enhance operational transparency, this platform risks overextending the precious trust that has supported its development thus far. The real test is just beginning.
Reflections and Insights
The market turmoil of the past few weeks has ruthlessly revealed the vast gap between the beautiful visions in the cryptocurrency space and the grounded realities. These events send a clear signal: strict risk control, transparent decision-making mechanisms, and robust liquidity management are not just embellishments but the foundation for project survival.
For projects like Hyperliquid and Arbitrum, patching vulnerabilities goes far beyond technical code updates. The real challenge lies in: how to rebuild community trust? How to maintain governance transparency? And how to demonstrate the necessary responsibility and responsiveness in times of crisis?
Moreover, the collapse of Mantra serves as a wake-up call for all projects serving institutions—in this field, comprehensive risk management and stable operational capabilities are not just bonuses but entry tickets. Now, the industry faces an unavoidable choice: to deeply learn from these hard-earned lessons or to continue dancing on the edge of a knife, welcoming even fiercer storms?
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