Hyperliquid Introduces On-Chain Validation for Asset Delisting Following Criticism of JELLY Memecoin Removal

Hyperliquid, a decentralized perpetuals trading platform, has introduced major changes to its blockchain infrastructure following significant criticism

Hyperliquid, the decentralized perpetuals trading platform, has announced major changes to its blockchain infrastructure. This follows significant criticism that arose from the platform's handling of the DELLY memecoin delisting, which occurred following a $6 million exploit that involved a whale forcing a short squeeze on the token.

To improve governance and prevent further backlash, Hyperliquid has now implemented fully on-chain validation for asset delisting. This process allows a quorum of validator stakes to autonomously trigger asset removal without relying on off-chain coordination.

The move is part of broader efforts to enhance transparency and trust within the Hyperliquid ecosystem, giving the community a more direct role in asset management. The platform also aims to respond to criticism it faced over its handling of the JELLY delisting, which sparked debate about centralization and governance within the platform.

Indeed, critics had slammed the platform for moving too quickly to delist the token and for not being transparent enough about the decision. They also raised concerns about the platform's governance and how it handled the situation.

"The MYRO perps validator vote to delist will be around 13:00 UTC on March 29th, as the Hyper Foundation validators vote to delist MYRO perps," Hyperliquid said in a recent post on X.

"We will be closing votes off-chain for clarity, but we are committed to strengthening the on-chain governance system."

The platform added that it is focused on refining its governance model, which includes further decentralizing validator voting and ensuring that its platform remains transparent and accessible.

Earlier this year, the Hyperliquid team stated that it would reimburse users who were affected by the incident and that the lessons learned would strengthen the network in the long term.

"As we navigate the dynamic landscape of the Web3 ecosystem, we remain committed to integrating user feedback and fostering a truly decentralized community," the team said.

However, despite these efforts, there are still concerns about centralization within Hyperliquid.

One of the main points of contention is the platform's control over a significant portion of staked HYPE tokens. Hyperliquid controls 81% of the staked HYPE tokens, which many in the community see as a sign of centralization that contradicts the platform's claim of being a decentralized exchange.

The exchange has also been criticized for limiting transparency and restricting participation, which has led some to question the platform's commitment to true decentralization.

Among those who criticized Hyperliquid was Bitget CEO Gracy Chen, who said that the way the platform handled the JELLY incident was "immature, unethical, and unprofessional."

This criticism raised concerns about the platform's integrity and trustworthiness, especially in light of its earlier claims about decentralization.

"It's not the simplest or the easiest to handle such an incident, but it's about choosing to do the right thing despite the difficulties that may arise," Chen added.

Meanwhile, blockchain analyst ZackXBT pointed out inconsistencies in Hyperliquid's approach to governance.

According to the analyst, the platform was more willing to act when it benefited its interests. For example, when a large trader exploited a liquidation vulnerability in an attempt to steal funds, Hyperliquid intervened quickly to close the position and prevent further losses.

However, when it came to community initiatives like a proposal to create a HYPE liquid mining program, the response was slower, and the project ultimately stalled due to a lack of urgency from the Hyperliquid team.

This inconsistency in governance priorities raised concerns about the platform's commitment to fostering a truly decentralized environment where community proposals and initiatives are treated with the same urgency and importance as internal operational issues.