Hyperliquid rebuts false claims: state is transparent and verifiable, moving toward progressive decentralization and full open‑source

As on‑chain derivatives move into the crypto mainstream, scrutiny of their security and governance models is healthy. On December 22, 2025 (UTC), Hyperliquid addressed a viral “reverse‑engineering” article that made a string of allegations about solvency, integrity, and transparency. In a point‑by‑point response across public channels, the team reiterated that platform state is transparent and verifiable on‑chain, outlined a roadmap to progressively decentralize validators, and reaffirmed plans to open‑source core components when it’s safe to do so. For traders and builders who rely on Hyperliquid’s L1 and HyperEVM, here’s what matters—and how to verify it yourself. (theblock.co)

What triggered the controversy

A widely shared technical blog post claimed, among other things, a $362 million “accounting gap,” overly centralized validator control, and opaque emergency powers. Notably, the author later struck through the $362 million claim after realizing it failed to include native USDC issued on HyperEVM, which runs in parallel to the historical Arbitrum bridge flow. This is central to understanding Hyperliquid’s solvency math. (blog.can.ac)

Key clarifications from Hyperliquid—and how to verify them

• “System is undercollateralized” is false when you include HyperEVM USDC. Public data corroborate that Hyperliquid’s USDC footprint spans the original Arbitrum bridge and native issuance on HyperEVM. The Block reported USDC on Hyperliquid more than doubled to about $4.9 billion in 2025 as the venue captured a larger share of on‑chain perp volume, while live dashboards show rapidly growing native USDC on HyperEVM. For a spot check: see The Block’s coverage and a native‑USDC snapshot on a third‑party tracker. (theblock.co)

• How to self‑verify USDC flows

  • Arbitrum bridge contract and code: Hyperliquid documents and open‑sources the bridge interface and contract, letting you reconcile deposits and withdrawals end‑to‑end. Start with the Bridge2 docs and the contract source. (hyperliquid.gitbook.io)
  • Native USDC on HyperEVM: Hyperliquid announced native USDC connecting HyperCore and HyperEVM, leveraging Circle’s CCTP to burn‑and‑mint USDC 1:1 across chains. You can read the announcement coverage and the official CCTP docs to understand the model and risks. (chaincatcher.com)

• Transparency of state and operations: Hyperliquid emphasizes a fully on‑chain order book with sub‑second finality; trades, liquidations, and funding are recorded on its L1 and exposed via public APIs and explorers. Even critics acknowledge that the debate now centers on governance design—not on whether executions are on‑chain. CoinDesk’s protocol newsletter recaps the trade‑offs that sparked this audit‑style discussion. (hyperliquld.xyz)

• Governance, validators, and decentralization: In response to claims that validator seats are “for sale” or the set is static, Hyper Foundation clarified that validators were selected based on testnet performance, reiterated that seats aren’t purchasable, and said the set will expand over time alongside a delegation program—part of a staged decentralization plan. The same thread acknowledges today’s code isn’t open‑source, but says open‑sourcing is a priority once doing so is safe. These points have been reported by multiple outlets. (theblock.co)

• Emergency responses and risk controls: Hyperliquid’s controversial March 26 JELLY incident—where the protocol delisted JELLY perps after “suspicious” activity and reimbursed most users—remains a lightning rod in the “how decentralized is too centralized” debate. The decision flow and outcomes are public; you can read contemporaneous reporting from multiple sources. (cointelegraph.com)

• ADL design is a live research topic: Following the October market break, researchers and the team debated whether common autodeleveraging policies are optimal. A new academic preprint analyzes ADL trade‑offs, while Hyperliquid’s co‑founder rebutted claims that ADL “transfers PnL to HLP,” stressing that ADL treats users and the HLP symmetrically and isn’t a revenue‑grab. Read both sides to form your view. (arxiv.org)

A 3‑minute, do‑it‑yourself solvency and integrity checklist

• Reconcile bridge flows
  • Pull recent deposits/withdrawals via the Arbitrum bridge contract and compare against your account history. Bridge interface and contract code are published for inspection. (hyperliquid.gitbook.io)
• Account for native USDC on HyperEVM
  • Check outstanding native USDC supply on HyperEVM and understand that it sits alongside the legacy Arbitrum route during the migration to native USDC. (usdc.cool)
• Read core docs and incident reports
  • Confirm operational design (HyperCore + HyperEVM, vault mechanics, and API behavior) and review incident post‑mortems from reputable outlets to gauge how the system behaved under stress. (hyperliquid.gitbook.io)
• Track decentralization signals
  • Follow validator‑set announcements, delegation programs, and code visibility plans—including recent governance actions like the Assistance Fund supply treatment vote—to judge how decentralization evolves. (cointelegraph.com)
• Calibrate ADL and liquidation risk
  • Read the latest ADL research and the project’s technical responses so you understand haircut and solvency trade‑offs before using high leverage. (arxiv.org)

Why the “$362M gap” claim fell apart

The “gap” stemmed from totaling only Arbitrum bridge balances while omitting native USDC on HyperEVM. As the researcher later noted in his own post, native USDC issuance (via CCTP) explains the delta. The broader data show that USDC on Hyperliquid expanded materially over 2025 as the venue’s share of on‑chain derivatives grew, with native HyperEVM issuance ramping in Q4. Cross‑checking both layers is the correct approach. (blog.can.ac)

What progressive decentralization looks like here

Hyperliquid is pursuing a sequence that many high‑performance chains have followed: stabilize the system, harden the code, then progressively diversify validators and open‑source the stack. Public posts from Hyper Foundation outline (1) performance‑based validator selection with plans to expand the set, (2) a delegation program to distribute stake, and (3) an intent to open‑source once it’s safe to do so. This doesn’t settle the debate—but it sets measurable milestones the community can hold the team to. (theblock.co)

For users: practical risk management

• Keep only active margin on a venue; custody long‑term assets yourself.
• Prefer native USDC routes and confirm token addresses to avoid “bridged USDC” confusion; understand how Circle’s CCTP works. (developers.circle.com)
• Monitor validator/governance announcements and liquidation policy changes—these directly affect tail‑risk. (theblock.co)
• Use reputable frontends and verify URLs, especially during high‑volatility events; phishing sites have impersonated major DeFi apps. (pcrisk.com)

For builders: composability and integration pointers

• HyperEVM now supports native USDC across HyperCore and HyperEVM, which simplifies cross‑chain onboarding and reduces reliance on third‑party bridges. Review the migration notes and Circle documentation before integrating. (chaincatcher.com)
• If you run risk tooling or analytics, incorporate both Arbitrum‑bridge and HyperEVM‑native flows to avoid undercounting balances or volumes. (theblock.co)

Our take

• The most serious solvency allegation collapsed under basic reconciliation once native USDC on HyperEVM was included.
• The harder questions—validator diversity, emergency powers, and when to open‑source—remain live and are precisely where the community should focus its oversight.
• For users, the right mental model is “on‑chain and verifiable, with evolving governance.” Treat leverage and counterparty assumptions accordingly. (blog.can.ac)

Should you use a hardware wallet when trading onchain perps?

Yes—especially during periods of volatility and controversy. A hardware wallet like OneKey lets you keep keys offline while still connecting to DeFi frontends, signing orders, and managing collateral on HyperEVM. That reduces phishing and malware risk and makes it easier to enforce a “hot vs. cold” capital discipline: keep only active margin online, and store the rest in cold storage. If you actively trade, consider pairing a hardware wallet with a separate “hot” wallet for margin top‑ups and withdrawals; that way your signing device stays in control even when markets get chaotic.

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Further reading and primary sources referenced above:

• USDC supply and Hyperliquid’s 2025 growth: The Block’s data coverage; HyperEVM native USDC snapshot.