The best solution is still for the Perp Dex protocol itself to mature with the market, gradually increasing liquidity to raise the cost for attackers until it becomes unprofitable. The current challenges are an inevitable part of the development of the track.

Recently, the address 0xf3f496c9486be5924a93d67e98298733bb47057c on Hyperliquid took a leveraged long position on ETH at 50, with a maximum unrealized profit of over $2 million. Due to the large size of the position and the transparent nature of DeFi, the entire crypto market was watching the movements of this whale. It was widely believed that his next move would typically be to increase his position to further boost profits or to close the position to cash in. Unexpectedly, he chose an action that no one anticipated: he withdrew his margin to take profits, which caused the system to raise the liquidation price of the long position, ultimately triggering liquidation and earning him $1.8 million.

What impact did this operation bring? It harmed the liquidity of the HLP (Hyperliquid Pool).

HLP is actively market-making through Hyperliquid, earning funding fees and liquidation profits through market-making, and all users can also provide liquidity to HLP.

Since the ETH whale made such high profits, a normal one-time closeout would have caused insufficient liquidity on the counterparty side. However, he actively sought liquidation, and this amount was absorbed by the HLP, resulting in a loss. On March 12 alone, the funds in the HLP decreased by approximately $4 million in just one day.

This attack signifies a severe challenge for Perp Dex, indicating that the liquidity pool mechanism must evolve. Let's take this opportunity to let WOO X Research take everyone through a comparison of the mechanisms currently used by the mainstream Perp Dex platforms (Hyperliquid, Jupiter Perp, GMX), and finally discuss how to prevent similar attacks from happening!

Reference: Hyperliquid

• Liquidity Provision: Funded by the community liquidity pool HLP (Hyperliquid Pool). Users can deposit assets such as USDC into the HLP Vault to become market-making liquidity providers on the platform. Additionally, users are allowed to create their own "Vaults" to participate in market-making and share in the profits.

• Market-Making Model: It uses a high-performance on-chain Order Book matching system, providing an experience comparable to centralized exchanges. The HLP vault acts as the market maker, placing orders on the order book to provide depth and handling unmatched portions to reduce slippage. Prices are referenced from external oracles to ensure that order prices are close to the global market.

• Liquidation Mechanism: Liquidation is triggered when the maintenance margin (usually starting at 20%) is insufficient. Any user with sufficient capital can participate in liquidations, taking over positions that fail to meet the maintenance margin requirements. The HLP Vault also serves as a liquidation insurance vault; if liquidation results in losses, they are borne by the HLP (as in this attack).

• Risk Management: It uses multi-exchange price oracles, updated every 3 seconds, to prevent malicious price manipulation in a single market that could lead to incorrect prices. For extreme situations caused by large whale positions, the minimum maintenance margin for some positions has been increased to 20% to reduce the impact of large liquidations on the pool. Anyone can participate in liquidations to increase decentralization, but there is a risk of a single Vault concentrating the risk. The downside is that as an emerging proprietary chain, it has not yet been tested over the long term, and there have been risks of significant liquidation losses in the past.

• Funding Rates and Position Costs: Funding rates are calculated hourly to anchor the contract price close to the spot price. If longs dominate shorts, longs pay the funding fee to shorts (and vice versa) to prevent long-term price deviations. For situations where the platform's net position exceeds the HLP's capacity, Hyperliquid raises margin requirements and may dynamically adjust funding rates to reduce risk. Position costs, aside from funding fees, have no additional interest for holding positions overnight, but high leverage increases the pressure on funding fee expenditures.

• Liquidity Provision: Provided by the multi-asset JLP (Jupiter Liquidity Pool), which includes index assets such as SOL, ETH, WBTC, USDC, USDT, etc. Users mint JLP by swapping assets, and JLP acts as the counterparty to bear the risks of leveraged trades.

• Market-Making Model: It abandons the traditional order book in favor of an innovative LP-to-Trader mechanism. Through oracle pricing, traders can trade directly with the JLP liquidity pool, enjoying a trading experience with near-zero slippage. Advanced features such as limit orders can be set, but in essence, all trades are filled by the pool at the oracle price.

• Liquidation Mechanism: It is automatic liquidation. When the position's margin ratio falls below the maintenance requirement (e.g., <6.25%), the smart contract automatically closes the position at the oracle price. The JLP liquidity pool acts as the counterparty, absorbing the gains or losses of the position. If a trader is liquidated, the remaining margin goes to the pool. Users can adjust their liquidation price by adding or removing collateral during the position, but over-collateralization can bring the liquidation price closer to the current price, making liquidation more likely.

• Risk Management: It uses oracles to keep contract prices close to spot prices, avoiding internal price manipulation. The high TPS of the Solana chain reduces the risk of liquidation lag, but instability in the underlying network can affect trading and liquidations. To prevent malicious manipulation, the platform can set limits on the total positions of a single asset (e.g., limiting the maximum leveraged position amount), and borrowing fees increase with asset utilization, making the cost of long-term one-sided positions higher and suppressing extreme biases. So far, traders have been in a net loss, while the JLP funds have grown relatively steadily.

• Funding Rates and Position Costs: There are no traditional funding rates. Jupiter Perp does not use long/short mutual funding fees because the counterparty is the liquidity pool, not long/short matching. Instead, there is a borrowing fee (Borrow Fee), which is accrued hourly based on the ratio of borrowed assets to the pool and deducted from the margin. Therefore, the longer the holding time or the higher the asset utilization, the more interest is accrued, and the liquidation price will gradually approach the market price over time. This mechanism acts as a cost constraint for long-term one-sided positions, avoiding the problem of long-term funding rate imbalances.

• Liquidity Provision: Provided by the multi-asset index pool GLP (GMX Liquidity Pool), which includes assets such as BTC, ETH, USDC, DAI, etc. Users deposit assets to mint GLP, and GLP acts as the counterparty for all trades, bearing the profits and losses of the trades.

• Market-Making Model: There is no traditional order book. Trades are executed through oracle pricing and the pool assets automatically act as the counterparty. GMX uses Chainlink's decentralized oracle to obtain market prices and executes trades with "zero slippage." The GLP asset pool acts as a unified market maker, regulating the assets within the pool through a price impact fee mechanism to ensure liquidity depth.

• Liquidation Mechanism: It is automatic liquidation. Using Chainlink index prices to calculate position values, liquidation is triggered when the margin ratio falls below the maintenance level (e.g., approximately 1.25 times the initial margin). During liquidation, the contract automatically closes the position, and the user's margin is first used to cover the pool's losses, with any remainder (if any) returned or incorporated into insurance. The GLP asset pool, acting as the counterparty, directly bears the losses or gains from the liquidated position.

• Risk Management: It uses authoritative multi-source oracles to reduce the risk of price manipulation through volume brushing, avoiding incorrect liquidations due to abnormal fluctuations in a single trading pair. There have been instances where traders exploited GMX's zero-slippage mechanism to manipulate prices in conjunction with external markets for arbitrage. The team subsequently set maximum position limits for easily manipulated assets such as AVAX (e.g., a maximum position size of $2 million). Through such position limits and dynamic fee mechanisms (the higher the asset utilization, the higher the position interest), leverage risks are restricted, and 70% of trading fees are rewarded to GLP to increase LPs' motivation to withstand losses.

• Funding Rates and Position Costs: GMX V1 does not have long/short mutual funding fees. Instead, there is a borrowing fee (charged at 0.01% per hour based on the borrowed asset ratio). This fee

The best solution is still for the Perp Dex protocol itself to mature with the market, gradually increasing liquidity to raise the cost for attackers until it becomes unprofitable. The current challenges are an inevitable part of the development of the track.

Recently, the address 0xf3f496c9486be5924a93d67e98298733bb47057c on Hyperliquid took a leveraged long position on ETH at 50, with a maximum unrealized profit of over $2 million. Due to the large size of the position and the transparent nature of DeFi, the entire crypto market was watching the movements of this whale. It was widely believed that his next move would typically be to increase his position to further boost profits or to close the position to cash in. Unexpectedly, he chose an action that no one anticipated: he withdrew his margin to take profits, which caused the system to raise the liquidation price of the long position, ultimately triggering liquidation and earning him $1.8 million.

What impact did this operation bring? It harmed the liquidity of the HLP (Hyperliquid Pool).

HLP is actively market-making through Hyperliquid, earning funding fees and liquidation profits through market-making, and all users can also provide liquidity to HLP.

Since the ETH whale made such high profits, a normal one-time closeout would have caused insufficient liquidity on the counterparty side. However, he actively sought liquidation, and this amount was absorbed by the HLP, resulting in a loss. On March 12 alone, the funds in the HLP decreased by approximately $4 million in just one day.

This attack signifies a severe challenge for Perp Dex, indicating that the liquidity pool mechanism must evolve. Let's take this opportunity to let WOO X Research take everyone through a comparison of the mechanisms currently used by the mainstream Perp Dex platforms (Hyperliquid, Jupiter Perp, GMX), and finally discuss how to prevent similar attacks from happening!

Reference: Hyperliquid

• Liquidity Provision: Funded by the community liquidity pool HLP (Hyperliquid Pool). Users can deposit assets such as USDC into the HLP Vault to become market-making liquidity providers on the platform. Additionally, users are allowed to create their own "Vaults" to participate in market-making and share in the profits.

• Market-Making Model: It uses a high-performance on-chain Order Book matching system, providing an experience comparable to centralized exchanges. The HLP vault acts as the market maker, placing orders on the order book to provide depth and handling unmatched portions to reduce slippage. Prices are referenced from external oracles to ensure that order prices are close to the global market.

• Liquidation Mechanism: Liquidation is triggered when the maintenance margin (usually starting at 20%) is insufficient. Any user with sufficient capital can participate in liquidations, taking over positions that fail to meet the maintenance margin requirements. The HLP Vault also serves as a liquidation insurance vault; if liquidation results in losses, they are borne by the HLP (as in this attack).

• Risk Management: It uses multi-exchange price oracles, updated every 3 seconds, to prevent malicious price manipulation in a single market that could lead to incorrect prices. For extreme situations caused by large whale positions, the minimum maintenance margin for some positions has been increased to 20% to reduce the impact of large liquidations on the pool. Anyone can participate in liquidations to increase decentralization, but there is a risk of a single Vault concentrating the risk. The downside is that as an emerging proprietary chain, it has not yet been tested over the long term, and there have been risks of significant liquidation losses in the past.

• Funding Rates and Position Costs: Funding rates are calculated hourly to anchor the contract price close to the spot price. If longs dominate shorts, longs pay the funding fee to shorts (and vice versa) to prevent long-term price deviations. For situations where the platform's net position exceeds the HLP's capacity, Hyperliquid raises margin requirements and may dynamically adjust funding rates to reduce risk. Position costs, aside from funding fees, have no additional interest for holding positions overnight, but high leverage increases the pressure on funding fee expenditures.

• Liquidity Provision: Provided by the multi-asset JLP (Jupiter Liquidity Pool), which includes index assets such as SOL, ETH, WBTC, USDC, USDT, etc. Users mint JLP by swapping assets, and JLP acts as the counterparty to bear the risks of leveraged trades.

• Market-Making Model: It abandons the traditional order book in favor of an innovative LP-to-Trader mechanism. Through oracle pricing, traders can trade directly with the JLP liquidity pool, enjoying a trading experience with near-zero slippage. Advanced features such as limit orders can be set, but in essence, all trades are filled by the pool at the oracle price.

• Liquidation Mechanism: It is automatic liquidation. When the position's margin ratio falls below the maintenance requirement (e.g., <6.25%), the smart contract automatically closes the position at the oracle price. The JLP liquidity pool acts as the counterparty, absorbing the gains or losses of the position. If a trader is liquidated, the remaining margin goes to the pool. Users can adjust their liquidation price by adding or removing collateral during the position, but over-collateralization can bring the liquidation price closer to the current price, making liquidation more likely.

• Risk Management: It uses oracles to keep contract prices close to spot prices, avoiding internal price manipulation. The high TPS of the Solana chain reduces the risk of liquidation lag, but instability in the underlying network can affect trading and liquidations. To prevent malicious manipulation, the platform can set limits on the total positions of a single asset (e.g., limiting the maximum leveraged position amount), and borrowing fees increase with asset utilization, making the cost of long-term one-sided positions higher and suppressing extreme biases. So far, traders have been in a net loss, while the JLP funds have grown relatively steadily.

• Funding Rates and Position Costs: There are no traditional funding rates. Jupiter Perp does not use long/short mutual funding fees because the counterparty is the liquidity pool, not long/short matching. Instead, there is a borrowing fee (Borrow Fee), which is accrued hourly based on the ratio of borrowed assets to the pool and deducted from the margin. Therefore, the longer the holding time or the higher the asset utilization, the more interest is accrued, and the liquidation price will gradually approach the market price over time. This mechanism acts as a cost constraint for long-term one-sided positions, avoiding the problem of long-term funding rate imbalances.

• Liquidity Provision: Provided by the multi-asset index pool GLP (GMX Liquidity Pool), which includes assets such as BTC, ETH, USDC, DAI, etc. Users deposit assets to mint GLP, and GLP acts as the counterparty for all trades, bearing the profits and losses of the trades.

• Market-Making Model: There is no traditional order book. Trades are executed through oracle pricing and the pool assets automatically act as the counterparty. GMX uses Chainlink's decentralized oracle to obtain market prices and executes trades with "zero slippage." The GLP asset pool acts as a unified market maker, regulating the assets within the pool through a price impact fee mechanism to ensure liquidity depth.

• Liquidation Mechanism: It is automatic liquidation. Using Chainlink index prices to calculate position values, liquidation is triggered when the margin ratio falls below the maintenance level (e.g., approximately 1.25 times the initial margin). During liquidation, the contract automatically closes the position, and the user's margin is first used to cover the pool's losses, with any remainder (if any) returned or incorporated into insurance. The GLP asset pool, acting as the counterparty, directly bears the losses or gains from the liquidated position.

• Risk Management: It uses authoritative multi-source oracles to reduce the risk of price manipulation through volume brushing, avoiding incorrect liquidations due to abnormal fluctuations in a single trading pair. There have been instances where traders exploited GMX's zero-slippage mechanism to manipulate prices in conjunction with external markets for arbitrage. The team subsequently set maximum position limits for easily manipulated assets such as AVAX (e.g., a maximum position size of $2 million). Through such position limits and dynamic fee mechanisms (the higher the asset utilization, the higher the position interest), leverage risks are restricted, and 70% of trading fees are rewarded to GLP to increase LPs' motivation to withstand losses.

• Funding Rates and Position Costs: GMX V1 does not have long/short mutual funding fees. Instead, there is a borrowing fee (charged at 0.01% per hour based on the borrowed asset ratio). This fee