Hyperliquid founder Jeff has taken aim at centralized exchanges (CEXs), accusing them of severely underreporting liquidation data and misleading users about the scale of risk during volatile market conditions.
In a post on X, Jeff claimed that even when “thousands of liquidations occur within a single second,” some CEXs only display one liquidation event publicly, masking real activity by up to 100 times.
The comment has reignited the long-running debate over transparency between centralized trading venues and decentralized onchain protocols.
“One Second, Thousands of Liquidations, Only One Shown”
Jeff’s remarks come as traders demand more transparency in how CEXs handle leverage and margin calls.
According to the Hyperliquid founder, some major exchanges, including Binance, publicly acknowledge that they only record one liquidation event per second, even when hundreds or thousands of users are being liquidated simultaneously.
That practice, Jeff noted, distorts the perception of risk across the broader crypto market.
“For example, on Binance, even if there are thousands of liquidation orders in the same second, only one is reported,” Jeff said. “Because liquidations happen in bursts, this could easily be 100x under-reporting under some conditions.”
Analysts believe such opacity could obscure systemic risk, leaving traders blind to the true scale of volatility events.
Hyperliquid operates as a fully onchain derivatives exchange, meaning every order, trade, and liquidation is recorded transparently on its blockchain.
The model contrasts sharply with centralized exchanges, where much of the trading activity occurs offchain, invisible to users until settlements are finalized.
“Anyone can permissionlessly verify the chain’s execution, including all liquidations and their fair execution for all users,” Jeff wrote. “Furthermore, anyone can verify the solvency of the entire system in real time.”
Hyperliquid’s transparency-first design allows participants to audit the system in real time, checking for fair execution and solvency without needing to trust a centralized operator.
Jeff added that this transparency and neutrality make onchain DeFi the ideal infrastructure for global finance, a direct challenge to the centralized dominance of platforms like Binance Futures and OKX.
While most major exchanges claim to use internal risk management systems to stabilize markets during high volatility, Jeff’s remarks expose how far DeFi protocols have come in terms of open auditing and public accountability.
In the wake of multiple exchange collapses and balance sheet scandals over the years, the push for onchain verification is gaining momentum.
Wu Blockchain, a popular crypto news source, reported that several DeFi communities echoed Jeff’s comments, calling for public liquidation data feeds to be standardized across all exchanges.
“Hopefully the industry will see transparency and neutrality as important features of the new financial system,” Jeff said. “And others will follow.”
At the same time, Hyperliquid has announced a major network upgrade, HIP-3, set to go live today. The upgrade will enable qualified developers to create permissionless perpetual contract markets on Hyperliquid’s blockchain.
The update allows any developer to deploy a new perpetual decentralized exchange (DEX) by staking 500,000 HYPE tokens on the HyperCore network.
This model transforms Hyperliquid from a single exchange into an ecosystem of permissionless DEXs, where developers can launch, manage, and scale their own perpetual products.
The HIP-3 upgrade also integrates with HyperEVM, adding compatibility with smart contracts, governance frameworks, and enhanced safety features.
For developers and traders alike, this marks a turning point, positioning Hyperliquid as a base layer for DeFi derivatives, not just a trading venue.
HIP-3’s permissionless market structure could dramatically expand the range of perpetual markets available to traders. Instead of relying on a centralized entity to list new assets, independent teams can deploy markets instantly, providing deeper liquidity and faster innovation.
By requiring a stake of 500,000 HYPE tokens, Hyperliquid ensures that only serious developers participate, aligning incentives and maintaining network stability.
This mechanism also introduces an economic layer of security, as staked tokens can act as collateral against malicious or negligent deployments.
Industry observers view HIP-3 as a major step toward decentralizing derivatives trading while keeping transparency and solvency verification at the heart of the design.
Jeff’s criticism of underreporting by CEXs is not just a technical complaint, it’s part of a broader narrative about trust and accountability in digital finance.
In traditional markets, regulators enforce reporting standards for liquidations and margin calls. In crypto, however, centralized exchanges self-report, meaning users must rely on opaque internal data.
Hyperliquid’s model turns that paradigm on its head, giving the public direct access to every event on the blockchain, no selective reporting, no hidden data.
The move aligns with DeFi’s ethos of verifiability and fairness, principles that have become increasingly important in a post-FTX world.
As Hyperliquid activates HIP-3 and invites developers to build permissionless perpetual markets, the protocol doubles down on its founding promise: full transparency, open access, and verifiable fairness.
While centralized exchanges continue to dominate trading volumes, Jeff’s comments underscore a growing tension between speed and transparency, a debate that could shape the future of crypto infrastructure.
For now, Hyperliquid stands at the forefront of onchain innovation, a transparent alternative in a market still clouded by opaque reporting.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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