Hyperliquid (HYPE) is at the center of a heated debate over its authenticator system. Critics have expressed concerns about a lack of transparency and decentralization, accusing the network of selling seats to validators and operating with a limited number of validators.
These allegations generated widespread discussion on social networks, especially on X (Twitter), as community members scrutinized the network’s operations and governance. Hyperliquid is a decentralized exchange (DEX) that operates on its own blockchain, different from most of its competitors.
Authenticator Transparency Issue by Hyperliquid
Community members expressed frustration with the network’s closed node source code and reliance on a single binary system. Critics say these practices disrupt transparency and contribute to centralization. Meanwhile, Hyperliquid has acknowledged this concern but defended its current approach.
“Yes, the node code is currently closed source, but open source code is important,” DEX declared in the post.
However, the company emphasized plans for the code to become public once it reaches a secure and stable state. As for single binary systems, the Hyper Foundation has shown that this approach is not uncommon, even in mature networks.
“There is currently a binary, but even very mature networks like Solana have the majority of validators running on a single client,” the post explains.
Additionally, in response to criticism, Hyperliquid issued a detailed statement on X, clearing up misconceptions about its authenticator settings:
- All validators are evaluated based on performance on the testnet, with no option to purchase validator seats.
- The Foundation’s Delegation Program will soon support high-performance validators and further decentralize the network.
- Anyone can operate an API server pointing at any node, ensuring flexibility and accessibility.
- Efforts are being made to improve the onboarding process on the testnet and prevent the formation of a black market for test HYPE Tokens.
Hyperliquid emphasizes that its set of validators will scale with the growth of the network, ensuring a more robust and decentralized infrastructure. The fund reaffirms its commitment to bringing all finance to the blockchain, with the community playing an essential role in growing the ecosystem.
Hyperliquid’s Past Controversies
This isn’t the first time Hyperliquid has come under scrutiny. Two weeks ago, the network denied allegations of a possible hack by North Korean organization Lazarus Group, despite on-chain evidence suggesting otherwise.
Additionally, Hyperliquid has faced criticism over Token price volatility and large outflows due to hacking concerns. As reported by TinTucBitcoin, 60 million USD of HYPE Tokens were withdrawn from the platform recently, coinciding with a decline in Token value.
Data from TinTucBitcoin shows HYPE is trading at $21.12 at the time of writing, down nearly 20% since Wednesday’s trading session opened.
Currently, HYPE’s market capitalization stands at approximately $7 billion, with a fully diluted valuation exceeding $21 billion. Circulating supply is approximately 333.93 million Tokens, with 5% HYPE TVL lock for distribution to the community.