Altcoins News

Story: Hyperliquid Vault Faces Scrutiny After $29M in User Funds Shifted to Other Blockchains

By Pankaj K

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Community Flags Unauthorized Fund Use. Cain O’Sullivan, a developer with Hyperdrive, raised concerns on X, warning that the HLP0…

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Team Responds: “Old Model No Longer Relevant”. In response, HLP0 lead developer “GigaSafu” addressed the situation on Discord, stating that…

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Dual Vault System Proposed. To address the controversy, the team is proposing a dual-token system:

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USDC CCTP to Bring Frictionless Transfers. The team is awaiting the rollout of USDC CCTP v2, which will enable seamless USDC transfers…

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No Withdrawals Yet. Despite the backlash, HLP0’s total TVL has remained unchanged as of today, with no confirmed user…

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Conclusion. Chainlink’s significant increase in reserve balances signals growing confidence among investors…

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The team behind HLP0, a tokenized wrapper of the Hyperliquid HLP vault, is under fire after redirecting $29 million of user funds from the Hyperliquid-native environment to…

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The HLP0 vault currently holds $40 million in total value locked (TVL), according to DeFiLlama.

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Cain O’Sullivan, a developer with Hyperdrive, raised concerns on X, warning that the HLP0 multi-sig can move user deposits at its own discretion.

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Hyperdrive plans to issue its own tokenized HLP solution once native USDC becomes available on Hyperliquid’s HyperEVM infrastructure.

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In response, HLP0 lead developer “GigaSafu” addressed the situation on Discord, stating that Hyperliquid’s introduction of native USDC has made the vault’s original mechanics…

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According to GigaSafu, minting via Arbitrum allowed for zero-slippage 1:1 deposits, which wasn’t possible through most native wrappers.

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He argued that by leveraging idle capital into DeFi strategies like arbitrage, automated market operations (AMO), and protocol bribes, HLP0 can outperform standard HLP APR rates.

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HLP0 will become a permissionless, decentralized wrapper for HLP, integrated with Hyperliquid’s CoreWriter and native USDC CCTP mints.

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HLP0+ will operate similarly to the current structure, where the vault manager uses idle capital for discretionary yield farming across chains.

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