jakiro
Author: Chi Anh, Ryan Yoon Source: Tiger Research Translation: Shan Oppa, Bitchain Vision
summary
-
The transparency of blockchain allows communities to expose misconduct and redistribute power, but it also brings new vulnerabilities.Visibility is now both an advantage and a disadvantage of Web3 projects, opens the door to strategic attacks and group-driven volatility.
-
Although transparency magnifies systemic risks—including problems such as exposure of insiders’ behavior and the utilization of protocols—avoiding transparency in order to avoid risks will violate the fundamental concept of Web3:Open Verification and Decentralized Trust.
-
The long-term success of Web3 will not be based on hidden behavior, but on the ability toRisk-resistant system for survival and growth under continuous public supervision.
1. New risks of transparency: from oversight tools to attack methods
The transparency of blockchain has become one of the core values of the Web3 industry.Unlike centralized databases that are controlled by a single entity, the blockchain runs in a real-time verified by all participants.Above a transparent and tamper-free account book.Transparency is the cornerstone of the Web3 architecture.
This transparency allows users to monitor the behavior of the projects they are concerned about in real time.They can track the wallet activity of founders, investors and big players, identify suspicious token transfers in minutes.In the Web2 world, internal transactions are often hidden behind private bank accounts, and ordinary people have no way to know them; while Web3’s ultimate transparency allows all transactionsInstant exposure.Compared to the fact that information disclosure takes several months in traditional finance, this real-time nature can be regarded as a disruptive innovation.
But this “innovation” also brings structural paradox.Transparency of responsibility and supervision should be enhanced, is increasingly being used to attack project parties and large-scale holders, even if they have no evidence of any misconduct..
This report will explore the positive and negative sides of blockchain transparency and raise a key question:Should Web3 insist on absolute transparency at all costs?
2. The double-edged sword effect of transparency
2.1 Positive side: expose internal behavior and restore market fairness
Between 2024 and 2025, a series of on-chain surveillance targeting insiders revealed the alleged token selling of team wallets, KOLs and early investors in multiple projects.Thanks to the transparency of blockchain, these behaviors were quickly exposed, triggering a strong backlash in the community.
For example, in the HAWK Meme coin event, more than 96% of the token supply was found to be concentrated in the hands of the project party and its affiliates.Once the information was exposed, the market reaction was extremely fierce: the market value of the currency plummeted from its peak of US$500 million to less than US$60 million, triggering regulatory investigations and seriously damaging its credibility.
The transparency of blockchain enables community members to act as real-time “supervisors”.Whether the project is led by a KOL or run by anonymous team, if it fails to act transparently, even if its behavior technically complies with the law, it often faces allegations of market manipulation.
Although transaction data is publicly visible to everyone,It’s not easy to interpret the meaning behind it.To accurately understand the intention and background of each transaction, specific professional knowledge is required, and it is difficult for ordinary users to make comprehensive judgments.However, with the continuous advancement of on-chain analysis tools, this cognitive gap is gradually narrowing.Users are now increasingly able to extract useful information from complex transaction flows and optimize their decisions based on them.
2.2 Negative side: When transparency backs on the platform itself
Today, increasingly advanced on-chain analytics tools make it easier for participants to access and interpret blockchain data.But this also brings new risks.With the improvement of monitoring capabilities,Transparency itself is also weaponized.Some projects with weak governance structure and highly concentrated token distribution are more susceptible to manipulation and collaborative attacks.
On March 26, 2025, Hyperliquid encountered a new type of protocol-level risk that is facilitated by the transparency it advocates.According to Arkham’s analysis, the specific process of this event is as follows:
-
The attacker analyzed the liquidation threshold and HLP vault size published by Hyperliquid to accurately calculate a liquidation point;
-
Using three wallets, a short order of $4.1 million and two long orders of $2.15 million and $1.9 million were opened respectively, toArtificially push up the price of JELLY tokens;
-
As JELLY prices rise, the first short order is liquidated and the losses are borne by the HLP vault;
-
External traders were affected by the rumors of OKX’s online launch and the expectations of “short squeeze” and followed up with long orders, further exacerbating price fluctuations;
-
Ultimately, Hyperliquid was forced to force the removal of JELLY and liquidate all positions at $0.0095 to curb systemic risks.
Hyperliquid architecture—includingTreasury exposure, margin level, liquidation threshold and position public display——Inadvertently provided the attacker with precise means of putting pressure on.In this incident, transparencyInstead of preventing manipulation, it provides tools for a coordinated financial attack.
Ironically, the transparency advocated by Hyperliquid ultimately leads not only to the platform’s direct financial losses, but also to the wider concerns about its governance capabilities and system’s resistance to stress.To prevent further systemic destruction, the team had to remove JELLY—a move that was necessary, but it was contrary to the original intention of decentralization.
Similar risks may occur in other projects.Even if the technical design itself is impeccable, as long as the protocol is open and transparent, it stillMay encounter unexpected attacks.Without a supporting defense mechanism and clear response strategies, transparency was originally intended to enhance trust, but could become the root cause of systemic instability.
In this context,Transparency is no longer just an advantage, it has become a strategic vulnerability.
2.3. Neutral: When transparency becomes a tool for “mass strategy”
The results of transparency cannot be simply divided into positive or negative.In some cases, transparency becomes a tool that presents a blurred line between promoting market equity and promoting individual self-interest.
This emerging trend is particularly obvious on Hyperliquid, with some investors beginning to actively “snipe” large traders based solely on public information on their positions.A typical case involves a trader named CBB who openly calls for a collaborative liquidation of a giant whale and claims eight figures of funds are ready.It should be noted that the locked trader did not violate the agreement or engage in any misconduct simply because the position is too large.Make it inevitably a target.
In addition, this behavior also reflects a psychological model in the Web3 environment, namely the modern version of the “weak defeat the strong” mentality.In the traditional narrative, David is portrayed as the weak of justice, and while Goliath is only a strong soldier who is fighting, he is regarded as an opponent for his strength.This is also true in Web3, where large holdings often become symbolic targets because of their “visible strength”, regardless of whether their behavior is justified or not.Visibility amplifies the public’s subjective perception, and this perception—not objective facts—is increasingly affecting group behavior.
therefore,Some innocent investors may suffer reputational blows or economic losses only due to their “exposure”.This fear of “public eyebrowing me” may curb large amounts of funds into the Web3 ecosystem, ultimately limiting the growth space of new projects.At the same time, the organized behavior of the masses may also focus the right to speak in the hands of a few influential groups—Ironically, this creates a new centralized form in the decentralized system..
3. New reality: Is the projectShould it be more transparent?
Transparency in Web3 is a double-edged sword.On the one hand, it enables the community to expose internal misconduct and reconstruct the market power landscape through collective action; on the other hand, it also exposes projects to unexpected attacks, including strategic market manipulation.While transparency is the original intention of building trust, it can also be a catalyst for systemic instability.
However, despite these risks,Give up transparency is neither realistic nor desirable for most Web3 projects.Transparency is the cornerstone of the Web3 spirit: it enables open verification, reduces information asymmetry, and transfers trust from centralized intermediaries to decentralized systems.If transparency is abandoned, the core difference between Web3 and traditional financial and technological structures will also gradually disappear.
Therefore, rather than retreating,Adapt to transparency and build strategies that can coexist.This includes embedding a compressive mechanism in the protocol design, establishing a clear crisis management framework, and actively guiding users to understand and communicate about the project.
For example, some projects have established DAO-based emergency response mechanisms to ensure transparent, community-approved governance of emergency interventions; others regularly launch vulnerability bounty programs to identify potential problems before they are exploited.
Transparency in Web3 cannot be reduced, it is a structural inevitable existence.Project parties must recognize that transparency will continue to amplify opportunities and risks.What can really go further is not those “hidden better” projects, but thoseSystems that can operate robustly while fully exposed.
