Source: aminagroup
Compiled by: BitpushNews Yanan
April 2025 was a restless month for the cryptocurrency market. The second quarter started off seemingly calm, but soon a series of unexpected events occurred. These events all exposed the fragile nature of the industry’s most ambitious projects. In this article, we will take a detailed look at the latest on-chain dynamics: from the sudden price crash to the more concerning underlying issues - the practice of decentralization, the effectiveness of risk management, and how protocol governance really works.
Mantra’s unexpected collapse
On April 13, 2025, Mantra, a benchmark project in the field of real-world asset tokenization, suffered a dramatic price crash. Its token $OM plummeted from $6 to $0.6 in just a few minutes. The astonishing 90% drop caused $5.5 billion in market value to evaporate in an instant. This crash not only hit market sentiment hard, but also exposed deep-seated problems in the project's operation, and even questioned the feasibility of the entire RWA (real-world asset) track.
As a pioneer in introducing traditional assets such as real estate and bonds into the blockchain, Mantra has won the favor of both institutional and retail investors, and its development momentum seems unstoppable. However, hidden dangers have long been buried under the glamorous appearance - the most critical contradiction is concentrated on the $OM token distribution mechanism.
The project initially promised to issue 50 million tokens and adopt a phased unlocking plan, but without sufficient communication, it was quietly adjusted to a daily release of 0.3% and an ultra-long vesting period lasting until 2027. Although the team claimed that this was to maintain long-term stability, community members generally felt kept in the dark: they were unable to participate in key decisions and were increasingly confused about the actual development direction of the project.
The fuse of the crash was ignited in the Binance futures market. Within seconds, a series of large short orders emerged one after another, creating huge selling pressure on the price of $OM. Liquidity on other platforms such as Bybit and OKX began to dry up almost at the same time - among them, a trader on OKX who was later called the "OM whale" further pushed down the price through continuous large sell orders, completely igniting market panic.
On-chain data revealed even more disturbing signs. A whale wallet that had held the tokens for more than a year suddenly began to transfer a large number of $OM tokens to exchanges. Although the single transfer was not surprising, its timing formed a terrible resonance with the sell-off of the exchange, accelerating the market out of control.
In the end, nearly 4 million $OM were sold in a short period of time, triggering a chain reaction and completely destroying the last line of defense of market confidence. This seemingly organized sell-off quickly turned into a full-scale collapse, causing the community's trust in the project to collapse.
The collapse of Mantra has taught the industry a hard lesson: rebuilding a new order on top of the traditional financial system requires a more rigorous architecture than imagined. Although the prospect of tokenization of real assets is still broad, this incident clearly shows that projects must have real transparency, fairness, and resilience to withstand extreme market fluctuations. Without these foundations, even the most beautiful vision may vanish in an instant.
ArbitrumDAO governance turmoil
A recent farce at Arbitrum DAO exposed the weakness of decentralized governance. A user named hitmonlee.eth spent only 5ETH (about $10,000) to obtain 19.5 million ARB token voting rights worth $6.5 million through the Lobby Finance platform. This platform, which specializes in voting rights delegation, inadvertently opened the door to governance loopholes.
After holding a huge amount of voting rights, the user immediately supported community member CupOJoseph to run for a seat on the DAO Oversight and Transparency Committee. Although the exchange of interests in governance games is not uncommon, the particularity of this incident is that such a large amount of voting rights can be bought at such a low price. This discovery immediately caused an uproar in the community, and it also forced people to re-examine the true value of the so-called "decentralization" of on-chain governance.
Facing doubts, Lobby Finance defended its model, emphasizing that the platform aims to promote transparency and broad participation in governance. However, the platform also admitted that the existing mechanism has flaws and admitted that stricter safeguards may need to be established to prevent potential abuse. This statement has caused a bigger stir in the community - the debate on the direction of governance reform continues to ferment: some members advocate a direct ban on obtaining voting rights through fund transactions; others propose the establishment of a "safe channel" mechanism, requiring funds to flow through trusted channels so that timely intervention can be made when violations are discovered.
Today, the decision-making power lies entirely in the hands of the community. The Arbitrum Foundation has made it clear that it will not administratively intervene in voting transactions, but will leave it to the community to decide the future direction: Should it be allowed to purchase voting rights with funds? How should obvious manipulation be punished? Or should such transactions be regarded as inevitable market behavior in decentralized governance?
This debate points to a more fundamental problem: the inherent flaws of the "one coin, one vote" governance model. This incident has exposed these structural weaknesses. To truly solve the problem, what is needed is not superficial adjustments, but a fundamental reconstruction of the power distribution and decision-making mechanism in the Arbitrum ecosystem.
Hyperliquid’s moment of crisis
Hyperliquid has frequently encountered security crises since its launch, and the incident that occurred a few weeks ago almost put this derivatives trading platform into a desperate situation.
In January, a whale established a leveraged position of up to $300 million on ETH. When the trader withdrew $8 million in unrealized profits, the liquidation threshold was quietly pushed up. When the market reversed, Hyperliquid's insurance pool - composed of funds deposited by users in the HLP vault - was forced to take over the position and ultimately suffered a loss of about $4 million. This incident exposed serious flaws in the platform's risk management, but few people realized at the time that this was just the beginning of the crisis.
The real storm came on March 26, when a game around the unpopular meme token JELLY almost destroyed the entire protocol. This carefully designed attack was textbook-level:
1. The attacker deposited $3.5 million USDC and shorted JELLY, which had a market value of only $10 million, on Hyperliquid, hitting the platform's leverage limit
2. Another whale holding 126 million JELLY simultaneously sold in the spot market, causing the price to plummet
3. The attacker quickly withdraws most of the margin, creating a lack of collateral
4. Hyperliquid’s automatic liquidation system forced the HLP vault to swallow 398 million JELLY short positions
5. The attacker then bought back a large amount of JELLY on CEX, driving the price up by 300%
When the price of JELLY soared, Hyperliquid faced unrealized losses of more than $10.5 million. Even more frightening, if the price hit $0.16, the potential loss could swell to $240 million.
Just when Hyperliquid was in deep crisis, mainstream exchanges such as Binance and OKX suddenly launched JELLY perpetual contracts, unexpectedly adding a dramatic twist to the farce. This move was interpreted by some observers as an intentional attempt to push up prices and weaken Hyperliquid's market position. But the real turning point came 26 minutes ago - the Hyperliquid Validator Committee voted to delist JELLY. In the end, the price of JELLY magically returned to the starting point of short selling, and the HLP vault not only avoided catastrophic losses, but also gained $700,000 in profits.
This thrilling escape cost Hyperliquid a heavy price: in order to preserve the protocol, its proud decentralized architecture was temporarily shelved, exposing the fact that it was still the centralized mechanism that turned the tide in times of crisis.
The incident revealed a harsh reality: Hyperliquid must thoroughly harden its systems. Although the upgrade is costly - requiring the use of funds from the protocol treasury, this investment is necessary to build long-term resilience. Current platform activity indicators show that it is working in this direction, but no system is perfect. Attackers will always look for vulnerabilities, as this JELLY incident proves.
Although the timely decision to delist JELLY avoided greater losses (and even achieved net gains), its decision-making process - quickly executed by a small number of validators and using non-market price settlement - once again raised questions about the degree of decentralization of the platform.
Hyperliquid may have weathered the crisis temporarily, and even has a slight surplus on paper. But if it fails to fundamentally fix the loopholes and improve operational transparency, the platform may overdraw the precious trust that has supported its development so far. The real test has just begun.
Reflection and Inspiration
The market turmoil in the past few weeks has ruthlessly revealed the huge gap between the beautiful vision and the reality of the cryptocurrency field. These events have sent a clear signal: strict risk control, transparent decision-making mechanisms, and robust liquidity management are not icing on the cake, but the foundation for the survival of the project.
For projects like Hyperliquid and Arbitrum, patching vulnerabilities is more than just a technical code update. The real challenge is: how to rebuild community trust? How to maintain governance transparency? And how to demonstrate due responsibility and response capabilities in times of crisis?
The collapse of Mantra is a wake-up call for all projects that serve institutions - in this field, perfect risk management and stable operation capabilities are not a plus, but an entry ticket. Today, the industry is faced with an unavoidable choice: to deeply learn from these lessons learned with real money, or to continue dancing on the edge of a knife and face a more violent storm?
