Recently, the cryptocurrency protocol Hyperliquid has faced claims questioning if their platform has enough financial backup (collateral). They strongly denied these accusations, explaining their assets held on the blockchain (on-chain assets) are worth over $4.3 billion, and all user funds are properly managed. They responded to concerns raised in an article that claimed their system might lack financial transparency. According to DefiLlama, a tracker for decentralized finance, Hyperliquid has more than $4.1 billion in total value locked (TVL). TVL indicates the total amount of cryptocurrency deposited in a protocol.
Hyperliquid’s Response to Claims
On December 22, Hyperliquid published their response on X (formerly known as Twitter). They explained that the accusation about insolvency was based on an accounting mistake. The author of the article didn’t include the USDC (a stablecoin value tied to the US dollar) held on their HyperEVM system. HyperEVM works alongside another system called the Arbitrum bridge. Adding these together, Hyperliquid confirmed their total USDC amount stands at $4.351 billion.
They emphasized that their blockchain system is fully solvent, meaning they have enough assets to back all user funds. They invited anyone interested to check this by running a node—a computer that participates in blockchain activities—and reviewing the data stored on-chain. Hyperliquid also dismissed claims about manipulating transaction volumes retrospectively (after they happened). They clarified that the highlighted code features are only available on testnet (a blockchain used for testing) and are designed to test fees under extreme situations. They assured users that these features are not active on their main blockchain (mainnet) and will be removed to prevent future confusion.
Addressing Security and Function Concerns
Other concerns raised by critics included claims that Hyperliquid has excessive control, risks over managing price oracles (tools providing asset price data), hidden lending activities, liquidations controlled by a few groups, and the possibility to freeze the blockchain via governance tweaks. Hyperliquid responded that these points resulted from misunderstandings about their system. They explained that specific tools (like CoreWriter) cannot create tokens or transfer user funds without explicit approval. They clarified that prices for their trading system come from averages of major exchanges and have community-driven pools anyone can participate in to manage liquidations.
Additionally, they highlighted that every trade or liquidation order is transparent and visible immediately after execution. The team argued this transparency offers stronger reliability than competitors who use central systems. A decentralized system, like theirs, avoids relying on single entities and ensures open access for the community.
Token Value and Community Actions
Hyperliquid’s effort to defend its system comes during a volatile time for its token, called HYPE. The token’s value has dropped significantly in recent months. It peaked at $59 in mid-September but later fell to around $25, marking a 24% drop within the last month and a 60% drop since its highest value.
At the same time, the community is discussing a proposal from the Hyper Foundation. The proposal suggests permanently burning 37 million HYPE tokens, equivalent to roughly 10% of its current supply. Burning tokens means removing them from circulation, typically to reduce supply and boost value. If approved, this proposal will eliminate about $1 billion worth of tokens from the market. Validators (computers that verify and approve blockchain activities) will vote on this matter by December 24.
However, this plan for reducing token supply conflicts with another event set to happen soon. On December 29, a scheduled token release of 9.92 million HYPE will occur, potentially increasing selling pressure as more tokens enter the market.
Hyperliquid remains firm about their platform’s stability and they continue to address concerns transparently.