Hyperliquid publicly releases all audits: The fight for transparency on the blockchain

Not just a media crisis, the recent Hyperliquid event has developed into a major test of the boundaries of decentralization in high-performance derivatives trading. As DeFi protocols become increasingly complex, the way asset safety is proven must also evolve.

Reversal Audit: From “Crisis” to “Lesson”

On December 20, 2025, a technical article from blog.can.ac analyzed the Hyperliquid binary file in reverse, listing 9 issues considered serious. The most severe allegation: Hyperliquid is missing $362 million in on-chain reserves, and some features described as “god mode” have the ability to print money out of thin air.

Hyperliquid responded with a detailed analysis, not only clarifying each point but also exposing a series of assumptions about the system architecture. This is not merely a FUD rebuttal, but a debate about the true definition of “decentralized trading.”

Where is the $362 million asset? The answer lies in a dual architecture

The most shocking accusation is based on simple audit logic: comparing total user deposits with the USDC balance on the Arbitrum bridge. According to this calculation, a $362 million gap has appeared – similar to “FTX on-chain.”

However, Hyperliquid’s explanation reveals an important detail: the project is currently transitioning from an L2 AppChain to an independent L1. This process results in a dual asset architecture:

Actual reserve distribution:

• On Arbitrum bridge: 3.989 billion USDC
• Principal on HyperEVM: 362 million USDC (which is the “overlooked” part)
• Contract on HyperEVM: 59 million USDC

Total payable: approximately 4.351 billion USDC – a number that perfectly matches the total user balances (Total User Balances) on HyperCore.

The so-called “gap of 362 million” is merely assets transferred from one bookkeeping system to another, not lost money. This is a lesson from traditional auditing: when technology becomes decentralized, verification methods must also change.

The 9 Allegations Ranking: What has been addressed?

Hyperliquid has clearly addressed most technical allegations:

Fully clarified:

• “CoreWriter” (printing money mode): The L1-HyperEVM interface under controlled access, cannot be misappropriated
• The 362 million gap: Principal assets transferred to HyperEVM
• Unpublicized lending protocol: HIP-1 documentation has been published, still in pre-release stage

Acknowledged but explained:

• “Modified volume” code in testnet: Isolated physically on mainnet, cannot be executed
• Only 8 broadcast addresses: Anti-MEV measures, committed to switch to “multiple proposers” later
• Chain can be “frozen as planned”: Standard upgrade procedure
• Oracle can be overwritten immediately: Designed for emergency liquidation safety

Remaining gaps:

• Governance proposals that cannot be queried: Not directly addressed by the project, leaving decision processes as a “black box” for users
• Bridge lacking “emergency exit”: Withdrawals depend on validator set approval, with no censorship-resistant forced withdrawal mechanism

The showdown with competitors: Who is truly decentralized?

An interesting point in the response is that Hyperliquid actively compared its architecture with other platforms. The project emphasizes that some competitors use a single centralized sequencer without publicly sharing execution logic or providing services like dark pools. In contrast, Hyperliquid allows all validators to execute the same state machine, making the entire state verifiable.

Market context over the past 30 days (according to DefiLlama):

• Leading platform: $232 billion in trading volume (26.6% market share)
• Second platform: $195 billion in trading volume (22.3% market share)
• Hyperliquid: $182 billion in trading volume (20.8% market share)

Although ranked third in trading volume, Hyperliquid has another advantage: open interest (OI) is significantly higher than competitors. The project is playing the “transparency card” – despite having 8 centralized broadcast addresses, the entire state is on-chain and can be verified by anyone.

Token HYPE: The truth behind the short rumor

The community also paid attention to rumors that HYPE was “shorted” and dumped by insiders. Hyperliquid responded on Discord: a short address starting with 0x7ae4 belongs to a former employee who left the team in early 2024.

The project emphasizes that it currently enforces strict trading controls for all employees and contractors, prohibiting abuse of position. However, regarding detailed token distribution and unlocking mechanisms, the community still expects more comprehensive transparency.

Industry lesson: Credit from data, not promises

The Hyperliquid event demonstrates an important trend: as DeFi protocols evolve into independent AppChains with complex architectures, traditional “checking contract balances” audits are no longer sufficient. Assets are now fragmented across multiple bridges and blockchains.

Proving “money still exists” is just the first step. The next step is truly transferring authority from the current 8 submit addresses to a more decentralized mechanism. Only then can Hyperliquid truly transition from “centralized transparency” to “decentralized transparency” – a hallmark of an ultimate DEX.

For the community, this event reaffirms the immutable law of crypto: Never trust any story. Verify every byte of data on the blockchain yourself.