HyperLiquid Responds to Scrutiny Over Lack of Decentralization, HYPE Slumps 15%

HyperLiquid, the layer-1 blockchain known for its derivatives exchange, has responded to criticism over an apparent lack of decentralization and issues around validators.

The concerns were initially published by Kam Benbrik, an employee at ChorusOne which operates several nodes across different blockchains. Many of the issues stemmed from HyperLiquid using “closed-source code,” which Benbrik claims “jails” node operators.

HyperLiquid also controls 81% of the staked HYPE and this portion of control has the potential to spur a series of negative outcomes.

“If a single entity controls 1/3 of the stake, they can halt the chain. If they control 2/3 of the stake, they control the network entirely,” Benbrik wrote.

HyperLiquid wrote its response on X, addressing the decentralization fears by stating that there will be a “Foundation Delegation Program” that will support high-performing validators thus enhancing decentralization.

On the closed-source code topic, HyperLiquid added: “The node code is currently closed source. Open sourcing is important. Projects open source evvel development is in a stable state. Hyperliquid ships at orders of magnitude faster than most projects. The scope is orders of magnitude larger than most projects as well. Code will be open source when it’s secure to do so.”

The discussion has resulted in the first etchings of negative sentiment around HyperLiquid, a stark contrast to the weeks that followed the launch of its native HYPE token, which rose from $3.57 to $33.5 on a wave of surging trading volumes.

HYPE has since slumped to $21.49, dropping by 15.37% in the past 24-hours alone, according to CoinMarketCap.