Understanding the Potential Risks of Perpetual Futures: The Double-Edged Sword of the Mark Price Mechanism

In March 2025, a niche token named JELLY triggered a significant liquidation event on the Hyperliquid platform. This event revealed the systemic risks of the mark price mechanism in the Perptual Futures market, as well as potential flaws in the design of innovative liquidity pools.

The Core Paradox of Perpetual Futures: False Sense of Security and Slanted Liquidation Mechanism

mark price: The liquidation tendency brought by the consensus game

The mark price is usually constructed based on the index price, calculated using a three-value median mechanism. This design is intended to provide a stable price but may instead become a target for attackers in illiquid markets.

Liquidation Engine: The Double-Edged Sword of the Platform

The liquidation engine uses the mark price as the trigger standard, rather than the actual transaction price. Many platforms adopt conservative liquidation parameters, which may lead to traders being liquidated early even when there is still margin available.

The Oracle Dilemma: Spot Liquidity Exhaustion Becomes a Weapon for Attack

Oracle: The Fragile Bridge Between On-Chain and Off-Chain

Although oracles faithfully record external data, they cannot assess the rationality of prices. This creates opportunities for market manipulation.

Attack Pivot: Utilize Liquidity Defects

Attackers exploit the liquidity disadvantage of target assets in the spot market, triggering severe price fluctuations through small orders, thus contaminating oracle data.

Structural Risk Analysis of Hyperliquid

HLP Treasury: Democratized Market Making and Clearing Counterparty

The HLP vault of Hyperliquid serves as both a market maker and a clearing counterparty, and this dual role provides attackers with exploitable opportunities.

The flaws in the liquidation mechanism

The internal funding structure and clearing model of the HLP treasury has vulnerabilities, making it unable to effectively disperse risk in extreme situations.

Jelly-My-Jelly Attack Case Analysis

Attack Process

1. Layout: Establish a $4 million short position
2. Raid: Rapidly drive up the spot price
3. Detonation: Polluted Oracle, triggering large-scale liquidation
4. Aftershock: The platform's urgent response, market reflection

Conclusion

The Jelly-My-Jelly incident exposed the vulnerability of the mark price mechanism in the Perptual Futures market. Attackers exploited the high correlation of oracle data, the aggregation algorithm's tolerance for outliers, and the liquidation system's blind trust in the mark price.

In the future, DeFi platforms need to find a balance between algorithm design and game theory analysis, establishing a truly manipulation-resistant Price Mechanism. This requires not only more efficient technology but also a deep understanding and prevention of systemic risks.