Hyperliquid responds to protocol security concerns: updated leverage system and HLP clearing mechanism

Hyperliquid responded to concerns that the Hyperliquid Agreement may suffer significant losses as a result of market manipulation.
Hyperliquid's margin design ensures the platform's solvency through a mathematical mechanism. HLP's losses are always limited to its own vaults, and the protocol operates without relying on HLP - a feature that existed before the JELLYJELLY event. The newly added protection mechanism after the event only optimizes the HLP's resistance to losses in the backup liquidation, and the underlying architecture of the protocol has not changed. In the recent JELLYJELLY incident, an attacker attempted to manipulate HLP (liquidity provider pool) by establishing a large long-short position on himself. Although the unpositioned squaring contract cap at that time allowed the establishment of positions worth 4 million USDC when trading, the logical vulnerability was that HLP used its entire fund balance to collateralize the liquidation. To be clear, the platform itself does not pose solvency risk, but HLP does face excessive risk exposure due to market manipulation.
The current HLP's clearing component vault has set a collateral limit, limiting potential losses through the backup clearing mechanism. Hyperliquid still maintains the original operating mechanism, and undercollateralized positions are processed in the following order: 1) market clearing 2) backup clearing 3) automatic deleveraging (ADL). The current HLP's backup clearing has added a protection mechanism. By setting a loss limit, the attack cost of manipulating the price of the marker is much higher than the limited benefit it can obtain from the HLP.