Come on! Interpretation of the Hyperliquid Event: 1. Timeline Early Development (May August 2023): HLP Vault establishes and integrates clearing functionality, establishing its position as the core liquidity pool for Hyperliquid. First attack (2023): SNX price manipulation event exposes vault risks with minimal losses ($37000). Major blow (March 12, 2025): Ethereum long position liquidation resulted in a loss of $4 million, triggering leverage and margin adjustments. Ultimate Crisis (March 2025): Attackers discover that it is better to use small market value tokens instead of manipulating large market value ETH. JellyJelly's empty single attack resulted in a floating loss of over $10 million, posing a threat to the treasury's comprehensive liquidation. The current three stages of the JellyJelly crisis are: Trader strategy: A trader establishes a large number of JellyJelly short positions on Hyperliquid, and then intentionally causes their account to explode by raising spot prices (possibly through other markets or over-the-counter operations). Due to the mechanism of Hyperliquid, HLP Vault will take over these positions when the account is liquidated. Treasury under pressure: After the takeover, the price of JellyJelly was accelerated, leading to a sharp increase in the floating losses of short positions held by the treasury. Squeezing risk: If individual investors withdraw from HLP Vault due to concerns about losses, the funds in the vault will decrease, and the liquidation line will continue to move downwards, forming a vicious cycle similar to "short selling". What would happen if a comprehensive liquidation occurred? Simply put, Hyper will eventually have to spend all the money in the treasury to buy JellyJelly. Every liquidation will instantly push this token to a price high. But this purchase won't really be made in one go, there will be several stages 1. Liquidation critical point: Assuming that the liquidation line of the vault is 90% of the total assets (i.e. triggering liquidation when the net asset value is below $216 million), the current floating loss has approached or exceeded this threshold. If the market is maliciously manipulated and the price of JellyJelly is pushed higher (such as $0.20 or more), the floating loss may quickly expand to tens of millions of dollars, directly piercing through all funds in the treasury. 2/Maximum loss: Theoretical maximum loss: HLP Vault's total assets of $240 million. If the empty positions held by the vault lose all funds and cannot be closed at a reasonable price during liquidation (such as due to liquidity depletion or slippage), the vault will be completely reset to zero. 3. Actual potential losses: Depending on market conditions at the time of liquidation. If the price triggers liquidation at $0.17 and the system can close the position at that price, the loss may be limited to between $15 million and $30 million. But if the price continues to rise (such as to $0.30), the loss may double or even more, ultimately leading to a total loss of the vault. 4. Impact and Chain Reaction Treasury participants: Users who provide liquidity will bear losses proportionally. If the vault is completely damaged, participants may lose all their money. Platform ecology: Comprehensive liquidation may trigger a trust crisis, leading to more users withdrawing their funds and further lowering the prices of Hyperliquid's TVL and HYPE tokens. Market volatility: Closing a large number of short positions during the liquidation process may push up the price of JellyJelly and exacerbate market chaos. summarize The comprehensive liquidation mechanism of Hyperliquid is that when the net asset value of HLP Vault falls below the liquidation line due to taking over non-performing positions, the system will liquidate all positions to repay debts. The theoretical maximum loss can reach all assets of the vault (approximately 240 million US dollars), while the actual loss depends on the market price and liquidity at the time of liquidation. In the JellyJelly incident, if the price is pushed above $0.15, liquidation could result in tens of millions of dollars in losses; If the market is subjected to extreme manipulation, it is not impossible for the treasury to suffer a total loss.