Curriculum·R410 Copy Trading, Vaults, and Agentic Execution·about 32 min
Vaults and delegated liquidity
By the end of this lesson you can
- →State what a depositor in a liquidity vault is actually selling
- →Explain why a vault's risk is set by the venue's worst listing rather than by its strategy
- →Compute the ratio that makes a thin listing an attack on the vault
- →Read a vault's terms for the four things that decide its exposure
Senior · enrolled learners
This lesson opens with Hyperliquid's HLP vault and JELLY, March 2025, read as a deposit.
- What happened
- Hyperliquid operated a shared vault, HLP, funded by depositors and presented as a way to earn from the venue's activity. Under the venue's rules a liquidated position that cannot be closed in the market passes to that vault. In March 2025 a trader opened a large short in the thinly traded JELLY perpetual while buying the underlying spot elsewhere and pushing the price up, which triggered liquidation of their own short. The position was too large for the vault to clear and its unrealised losses reached between $12M and $13.5M as the price kept rising. Validators reached consensus in about two minutes, delisted the market, overrode the JELLY oracle price and settled all positions at $0.0095 against a market showing roughly $0.50, a haircut of about 98.1 percent.
- The decision point
- The depositors had bought a yield product and were holding an underwriting position in every market the venue listed. What ended the episode was not the vault's strategy but a discretionary price override agreed by a small set of parties in two minutes. Both of those facts were properties of the arrangement before anybody deposited, and both were readable in the documentation.
- Recorded loss
- $13,500,000
What you will be able to answer
- →What does a vault depositor sell?
- →What sets a vault's risk?
- →What ratio makes a listing an attack?
- →What four terms decide the exposure?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.coindesk.com/markets/2025/03/26/hyperliquid-delists-jellyjelly-after-vault-squeezed-in-usd13m-tussle
- https://www.halborn.com/blog/post/explained-the-hyperliquid-hack-march-2025
- https://oakresearch.io/en/analyses/investigations/hyperliquid-jelly-attack-context-vulnerability-team-solution
- https://info.arkm.com/research/hyperliquid-whale-passes-4m-loss-to-hlp-vault
Confidence medium·Volatility high·Reviewed 2026-08-07·Owner unassigned
Contested
J302-11 uses this incident as a perpetual venue architecture case, covering the backstop as the component that distinguishes such a venue and the governance question raised by the override. This lesson uses it as a delegation case, covering what a depositor is buying and what terms decide it. The split is declared and the JELLY figures are shared. Keep it.
Whether the validator override was appropriate remains genuinely contested, with serious commentators on both sides at the time. Per P6 this lesson presents the fact and its implication for a depositor without resolving the question.
R402-04 owns the waterfall of insurance fund, auto-deleveraging and socialised loss. J312 owns cover protocols and their capital pools. This lesson owns the depositor's side of a delegated liquidity product. Keep the splits.