Hyperliquid In-Depth Research

1. Main Business: Decentralized High-Performance Exchange#

Hyperliquid is a decentralized exchange (DEX) built on a self-developed Layer-1 blockchain, with its core positioning to provide a trading experience comparable to centralized exchanges while maintaining decentralization and user control over assets (What Is Hyperliquid? | CoinLedger) (What Is Hyperliquid? | CoinLedger). The platform mainly provides perpetual contracts and spot trading services, supporting leverage and margin trading, allowing users to engage in derivative trading of crypto assets. Hyperliquid's target users include professional traders, institutional investors, and high-frequency traders, while also catering to ordinary retail users—by simplifying the usage process and lowering the DeFi entry barrier, making their experience close to that of centralized exchanges like Coinbase and Kraken (What Is Hyperliquid? | CoinLedger).

Product Features and Characteristics:

High-Speed Trading and Low Fees: Hyperliquid offers extremely low trading fees and a fast execution experience. According to official sources, trading fees are significantly lower than most exchanges, and it supports quick operations like "one-click ordering" (What Is Hyperliquid? | CoinLedger). Low-latency matching allows users to feel almost no wait time for block confirmations, providing an experience close to instant execution.
Multi-Chain Asset Direct Deposit: The platform supports direct deposits of assets from over 30 chains (What Is Hyperliquid? | CoinLedger). Users can directly deposit assets from different blockchains like Ethereum, Solana, and Base into the Hyperliquid chain without complex cross-chain operations. This design is similar to multi-chain deposits in centralized exchanges, but Hyperliquid achieves this through built-in bridging or asset anchoring, allowing user funds to easily aggregate into exchange accounts.
Trading Variety: Currently supports spot trading and perpetual contract trading. Perpetual contracts allow users to go long or short on cryptocurrency prices without holding the underlying assets, making them extremely popular derivatives in current crypto trading (Beginner's Guide to Hyperliquid | Trust). Hyperliquid focuses on providing no expiration, high-leverage perpetual contract products, equipped with advanced order types like take profit/stop loss (TP/SL), aiming to meet the needs of professional traders (as seen in its documentation, it supports various order types and matching mechanisms (Dual-block architecture | Hyperliquid Docs) (Dual-block architecture | Hyperliquid Docs)).
User Experience: To lower the entry barrier for newcomers, Hyperliquid offers an experience similar to traditional internet applications: supporting email registration/login to create wallet accounts, as well as custodial email wallets (where users control the keys but can access them conveniently via email), thus eliminating the difficulties of installing browser wallets and managing private keys for newcomers. This model combines the ease of use of centralized exchanges with the security of decentralized wallets.
Development Ecosystem: As an independent Layer-1 blockchain, Hyperliquid is not only an exchange but also an open platform. Third-party developers can build decentralized applications (DApps) on it. Hyperliquid integrates the Ethereum Virtual Machine (EVM), allowing developers to deploy smart contracts and utilize Hyperliquid's high-performance liquidity and trading infrastructure as building blocks (About Hyperliquid | Hyperliquid Docs). This means that besides the official exchange interface, the community can also build various strategy trading bots, yield aggregators, vaults, etc., enriching the entire ecosystem.

In summary, Hyperliquid's main business is a one-stop high-performance decentralized trading platform, with a market positioning aimed at becoming a bridge linking traditional centralized trading experiences with decentralized security: allowing users to enjoy fast matching, deep liquidity, and diverse trading tools while retaining control over their assets and on-chain transparency (What Is Hyperliquid? | CoinLedger).

2. Technical Implementation Logic: Underlying Architecture and Smart Contract Design#

Independent Blockchain: Hyperliquid has developed a dedicated Layer-1 blockchain from scratch, not based on existing chains like Ethereum, but optimized from first principles (About Hyperliquid | Hyperliquid Docs). It uses a self-developed consensus algorithm "HyperBFT" (inspired by the HotStuff consensus protocol), specifically tailored for high throughput and low latency scenarios (About Hyperliquid | Hyperliquid Docs). BFT-type consensus can achieve rapid final confirmation among nodes; once a block is generated, it is considered final and cannot be forked back (About Hyperliquid | Hyperliquid Docs). This design ensures extremely short transaction confirmation times and meets the demands of high-frequency matching.

Dual Execution Layer Architecture: Hyperliquid divides on-chain execution into two parts: HyperCore and HyperEVM (About Hyperliquid | Hyperliquid Docs).

HyperCore: This is the core trading module on the chain, responsible for the order book matching of perpetual contracts and spot trading, margin calculations, and liquidation functions. HyperCore executes all logic related to order submission, cancellation, matching, and liquidation on-chain, utilizing HyperBFT consensus to achieve single-block finality, ensuring that each transaction is settled within a block and is irreversible (About Hyperliquid | Hyperliquid Docs). According to official disclosures, HyperCore currently supports 200,000 orders per second, and the team continues to optimize and enhance this capability (About Hyperliquid | Hyperliquid Docs). This module is equivalent to the matching engine of traditional exchanges but operates on blockchain consensus, maintained collectively by all validators, ensuring the process is transparent and tamper-proof.
HyperEVM: This is the Ethereum-compatible smart contract environment. The Hyperliquid chain is not limited to fixed functions; it also introduces EVM to allow users to deploy and call smart contracts (About Hyperliquid | Hyperliquid Docs). HyperEVM enables developers to build various DeFi protocols or DApps on Hyperliquid and call HyperCore's foundational financial primitives (such as order books and liquidity) for underlying support. Through this design, Hyperliquid provides high-performance trading while retaining general programmability, with the potential to expand into a complete financial ecosystem.

On-Chain/Off-Chain Solutions: Unlike some perpetual DEXs, Hyperliquid insists on keeping all key trading logic on-chain, without relying on off-chain matching services (What Is Hyperliquid? A Beginner's Guide | Hyperliquid Overview | blocmates). Every order and transaction is recorded through blockchain consensus (About Hyperliquid | Hyperliquid Docs), avoiding the risks of opaque matching or downtime that centralized servers might bring. This makes Hyperliquid closer to being fully decentralized. However, to achieve centralized exchange performance in a decentralized manner, Hyperliquid primarily reduces latency through efficient network communication and optimized node software, such as using a custom P2P network protocol stack to quickly disseminate transactions and blocks. Additionally, Hyperliquid may employ some off-chain assistance at the user experience level: for example, providing high-performance API gateways and data services, but these do not participate in the final confirmation of transactions, only accelerating access.

Smart Contract Mechanism: Hyperliquid's perpetual contracts are not implemented through typical Solidity contracts (like GMX, which uses contract logic for matching) but are deeply integrated into the chain's native code (HyperCore). This means that the mechanisms of perpetual contracts (such as funding rates, margin, and forced liquidation rules) are guaranteed by the protocol-level logic of the chain itself. On one hand, this implementation greatly improves efficiency (no need for each transaction to trigger slow EVM execution); on the other hand, it presents itself as a "contract" market, where user interactions are similar to other perpetual DEXs. Meanwhile, Hyperliquid also has some ordinary smart contracts (in the HyperEVM part), such as its bridge contracts, multi-signature contracts, and token contracts, which may be implemented through EVM to be compatible with external tools and audits.

Unique Technical Advantages: Hyperliquid has made several breakthroughs in its technical implementation:

Extremely Short Block Times and Parallel Architecture: It adopts a "dual-block mechanism", running both high-speed small blocks and low-frequency large blocks to balance confirmation speed and transaction capacity (Dual-block architecture | Hyperliquid Docs) (Dual-block architecture | Hyperliquid Docs). Currently, small blocks are generated every 2 seconds with a capacity of 2 million Gas, while large blocks are generated every 60 seconds with a capacity of 30 million Gas (Dual-block architecture | Hyperliquid Docs). This allows users' ordinary transactions (such as placing and canceling orders) to be confirmed within 2 seconds, while larger contract deployments and other operations are processed in large blocks without affecting the speed of small blocks (Dual-block architecture | Hyperliquid Docs). This architecture allows Hyperliquid to avoid the typical blockchain trade-off of "either fast blocks with small capacity or slow blocks with large capacity," simultaneously enhancing performance along both dimensions.
Optimized Consensus and Network: HyperBFT has made performance adjustments based on BFT algorithms, combined with improved network broadcasting protocols to minimize end-to-end latency (What Is Hyperliquid? A Beginner's Guide | Hyperliquid Overview | blocmates). In fact, some sources claim that Hyperliquid currently has an actual block time of less than 1 second (Beginner's Guide to Hyperliquid | Trust) (possibly referring to consensus latency, plus some network propagation, resulting in an overall near-second confirmation), which makes its transaction settlement speed comparable to traditional matching engines.
High Scalability: The Hyperliquid chain has been designed with optimization space reserved. For example, node software is continuously updated to enhance throughput, and future technical upgrades may further increase the TPS limit (Dual-block architecture | Hyperliquid Docs). At the same time, introducing EVM means developers can utilize mature Ethereum tools and languages, reducing the difficulty of developing applications for its ecosystem.

In summary, Hyperliquid has chosen the route of self-developed chain + on-chain order book at the underlying technology level, bypassing the performance bottlenecks of existing public chains to achieve on-chain matching engine. Its smart contract logic is clearly layered: key logic such as transaction matching is guaranteed by the chain itself, while general logic is extended through EVM, achieving a combination of performance and flexibility. This technical solution constructs Hyperliquid's unique high-performance decentralized trading foundation.

3. Technical Architecture: Matching Mechanism, Data Storage, and Security#

Matching Mechanism: Hyperliquid adopts a traditional order book model for matching. Users can submit limit orders, market orders, etc., on-chain (Dual-block architecture | Hyperliquid Docs), all orders enter the on-chain order book queue, executed by the matching algorithm based on price and time priority. When the prices of buy and sell orders match, they are matched and settled in the next block (About Hyperliquid | Hyperliquid Docs). Due to the high frequency of consensus, matching occurs almost continuously, similar to the uninterrupted matching of centralized exchanges. It is worth noting that the matching process is executed by decentralized validator nodes, avoiding potential dark box operations of centralized matching servers. To prevent abnormal behaviors such as self-matching, Hyperliquid has also implemented a self-matching protection mechanism (Dual-block architecture | Hyperliquid Docs), ensuring that user orders do not match with themselves, thus avoiding wash trading and other behaviors. The entire matching mechanism can be seen as implementing a high-performance matching engine on the blockchain, with each node maintaining a synchronized state of the order book.

Margin and Liquidation: As a perpetual contract exchange, Hyperliquid's architecture includes a clearing module (Clearinghouse) (Dual-block architecture | Hyperliquid Docs) and a price oracle (Oracle) (Dual-block architecture | Hyperliquid Docs). Users need to pay margin according to leverage ratios when placing orders, with the chain recording user positions and margin balances. The on-chain oracle provides the index price of the underlying asset (which may come from aggregated market data or decentralized price feeds) to calculate unrealized profits and losses and margin ratios. When market fluctuations lead to insufficient margin to maintain a position, the on-chain forced liquidation logic is triggered (Dual-block architecture | Hyperliquid Docs): the matching engine will liquidate the remaining part of the position at market price to prevent negative balances. Hyperliquid claims to have adopted mechanisms such as robust price indices and automatic deleveraging (Dual-block architecture | Hyperliquid Docs) to enhance the security of the liquidation process, minimizing the risk of malicious manipulation and liquidation events. These risk control logics are all written into the on-chain Clearinghouse module and have undergone rigorous testing and auditing to ensure reliability.

Data Storage Solution: As a blockchain, all transaction data and state data are stored in a distributed ledger. This mainly includes: user account balances (funds in various currencies), position information (contract quantities and average prices), pending order lists, historical transaction records, etc. Whenever there is a new order or transaction, the relevant state is saved in a new block and updated in the state database of all network nodes. Considering the massive order volume, Hyperliquid may have made special optimizations for order book storage. For example, it only retains currently valid orders in the state, while historical transactions are logged/events for querying, rather than continuously occupying hot storage. Additionally, Hyperliquid provides historical data services (Dual-block architecture | Hyperliquid Docs) and APIs, making it convenient for users or analysts to query past transactions, candlestick data, etc. Since the complete transaction flow is saved on-chain, Hyperliquid has high data transparency, with all transactions and fund movements viewable on the block explorer or data interfaces. To balance performance and storage, nodes may require certain hardware specifications, but efficient data structures (such as balanced binary trees or compressed order book representations) support high-frequency read and write operations.

Security Measures: Hyperliquid adopts multiple layers of security measures:

Consensus Security: Using BFT consensus, more than 2/3 of nodes must reach consensus to finally confirm a block (What Is Hyperliquid? A Beginner's Guide | Hyperliquid Overview | blocmates). The BFT mechanism inherently prevents Sybil attacks (requiring control over a large number of validating nodes to commit malice) and on-chain double spending. HyperBFT's ability to counter Byzantine nodes means that the system can still operate normally with up to 1/3 of nodes being malicious. This is more efficient and faster than proof-of-work, and it also avoids the MEV issues of miners proposing blocks since blocks are determined collectively by validators.
Transaction Security: Hyperliquid contracts and chain code undergo audits and continuous security monitoring. The official team provides a bug bounty program (About Hyperliquid | Hyperliquid Docs), encouraging white hats to find vulnerabilities to timely fix potential risks. Additionally, the platform sets risk control parameters, such as maximum leverage per account and single market risk limits, to prevent individual accounts from maliciously manipulating the market or taking on excessive risks.
Asset Security: User assets are held in on-chain smart contracts, and only the user (private key) or authorized contracts can operate withdrawals. Hyperliquid natively supports multi-signature wallets (Dual-block architecture | Hyperliquid Docs), which is particularly important for institutional users or team accounts, allowing for multi-signature management of funds to prevent single-point leaks from leading to asset transfers.
Oracle and Price Protection: Perpetual contracts rely on oracles to provide reasonable prices; Hyperliquid may integrate mainstream decentralized oracles like Chainlink or use its own weighted index price (Dual-block architecture | Hyperliquid Docs). At the same time, to cope with extreme market conditions, the platform has a price protection mechanism (such as limiting forced liquidation or delaying trading when the marked price deviates too much from the latest transaction price) to avoid unnecessary losses caused by flash crashes.
Anti-Manipulation: Since all transactions are transparent on-chain, abnormal trading behaviors (such as self-matching wash trading or large abnormal fund transfers) can be promptly detected through monitoring on-chain data. Hyperliquid's design also includes a natural advantage in preventing internal personnel cheating—because matching and settlement are executed by on-chain code, there are no backdoors for manual intervention in trading order.

Performance and Decentralization Balance: It is worth mentioning that while bringing high transparency and security through on-chain matching, handling such high-frequency trading also places demands on the reliability of the chain itself. To this end, they have repeatedly refined performance during the testnet phase and gradually expanded capacity after the mainnet launch. Currently, its throughput performance has been validated by the market, maintaining stable operation even during peak periods (with daily trading volumes in the hundreds of billions of dollars) (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). In terms of decentralization, Hyperliquid's mainnet runs several validator nodes (possibly operated by the community and the team), and as the ecosystem develops, it will introduce more third-party validator nodes through staking HYPE tokens, enhancing the network's decentralization and security redundancy.

In summary, Hyperliquid's technical architecture embeds high-performance order book matching into the underlying blockchain, ensuring data consistency and efficiency through carefully designed storage and consensus, supplemented by multiple security mechanisms to safeguard funds and transaction security. This architecture makes it a rare decentralized trading platform that is both "fast and secure."

4. Competitive Advantages and Barriers to Entry#

Performance Advantage: Hyperliquid's biggest weapon is its performance. Achieving hundreds of thousands of orders processed per second and sub-second confirmations on-chain is a speed that is hard to imagine on typical public chains (Beginner's Guide to Hyperliquid | Trust). In contrast, conventional chains like Ethereum can only process dozens of transactions per second, which cannot support centralized order book trading. Hyperliquid's self-developed chain solves this bottleneck, providing users with trading speeds and smoothness comparable to top centralized exchanges (What Is Hyperliquid? A Beginner's Guide | Hyperliquid Overview | blocmates). This performance advantage directly attracts a large number of traders seeking speed and low costs, including market makers and quantitative teams.

Fully On-Chain & Transparency: Unlike some hybrid model exchanges (such as the early dYdX V3, which hosted the order book on centralized services), all trading activities of Hyperliquid are publicly completed on-chain (What Is Hyperliquid? A Beginner's Guide | Hyperliquid Overview | blocmates). This brings high transparency and auditability: users can verify each transaction and fund transfer to ensure compliance with rules, without needing to trust a centralized operator. This transparency not only enhances security and trust but also serves as a selling point for Hyperliquid compared to centralized exchanges—eliminating dark boxes. Especially after experiencing incidents of centralized exchanges misappropriating user assets or going bankrupt, many users prefer this transparent trading environment.

Innovative Listing Mechanism: Hyperliquid adopts a public and transparent Dutch auction mechanism for new token listings, attempting to reshape the industry's listing rules (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). If a project wishes for its token to be listed on Hyperliquid, it must participate in the auction for the token trading code (ticker) (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). The auction is conducted in a Dutch auction format, with bids decreasing from high to low, and the final winner gains the qualification to list a specific token during that period (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). Auctions are held approximately every 31 hours, with a maximum of 282 new tokens listed per year (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). More importantly, the auction proceeds do not go into the team's pockets, but are injected into the community's HLP Vault (treasury) (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher), and then returned to the community in the form of staking rewards (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). This mechanism makes the listing process publicly competitive, and the destination of fees transparent, avoiding the controversy of traditional exchanges "secretly charging high listing fees." For users, this means Hyperliquid can often list new projects with high community attention (because projects are willing to pay real value to bid), and the performance after listing is often better (the auction screening brings a certain quality guarantee (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). This innovation enhances Hyperliquid's reputation in the industry, giving it a unique appeal in the trading of popular new tokens.

Ecosystem Integration and Scalability: Hyperliquid integrates the exchange and blockchain into one, forming its own ecological barrier. On one hand, its chain inherently carries a large trading volume and liquidity, which is difficult for newcomers to replicate; on the other hand, it opens the EVM for more applications to join, enhancing its own stickiness. For example, some third-party developers utilize Hyperliquid's APIs and contracts to develop quantitative trading bots or strategy vaults, and these peripheral ecosystems in turn promote the increase in trading volume, creating positive feedback. In contrast, traditional exchanges are merely closed platforms, while Hyperliquid resembles a financial public chain, with a wider moat.

User Base and Network Effects: By the end of 2024, Hyperliquid had accumulated over 300,000 users (What Is Hyperliquid? | CoinLedger) and substantial daily trading volumes. This network effect gives it a first-mover advantage: an active trading community and deep order book liquidity attract more new users, as liquidity means smaller slippage and a better trading experience. For new competitors, shaking this network effect requires significant investment and time. Additionally, Hyperliquid has locked in user stickiness by distributing a large number of tokens to early users through airdrops—users holding HYPE tokens have the motivation to continue supporting the platform and participate in governance.

Barriers to Entry: Replicating Hyperliquid's success requires overcoming both technical challenges and cold start issues. Technically, developing a high-performance chain from scratch is not easy, including building consensus algorithms, optimizing network latency, and developing on-chain matching logic, which requires a top engineering team and extensive refinement. Even if the technology is realized, it still needs to gain user trust through rigorous security audits and long-term stable operation, making the technical barrier very high. Furthermore, a cold start requires liquidity and trading volume support. Hyperliquid may have gained a certain level of liquidity and depth in its early stages through market maker collaborations, trading mining, or other incentives; once a critical scale is reached, it can maintain a positive cycle. Newcomers without similar resources or creativity will find it challenging to attract traders. Moreover, Hyperliquid's existing leading position allows it to adjust strategies (such as lowering fees or introducing new products) to maintain competitiveness, making it difficult for new projects to surpass it.

Security and Reputation: Hyperliquid has not experienced any major security incidents or prolonged downtime since its launch, establishing a good reputation in the DeFi space. Users of a platform involving large amounts of funds and leveraged trading often place great importance on security records. Once a platform has experienced downtime or significant price fluctuations leading to user losses, user confidence will be undermined. Hyperliquid's current stable operation is itself a competitive advantage. New entrants not only need to catch up in functionality but must also prove that they are equally safe and reliable, which requires time to build.

In summary, Hyperliquid's competitive advantages focus on "speed, comprehensiveness, and transparency": fast trading (outstanding performance), comprehensive offerings (perpetual + spot, multi-chain asset support, continuous new token listings), and transparent processes (verifiable on-chain, fair rules). At the same time, with its innovative operational mechanisms and first-mover scale effects, it has established formidable barriers to entry. As it continues to evolve user governance and technology iterations, these advantages are expected to be further solidified.

5. Revenue Model and Data: Fees, Income, and Token Economics#

Revenue Sources: As a trading platform, Hyperliquid's main source of profit is trading fees. Whenever users execute trades in the spot or perpetual markets, the platform charges a certain percentage as a fee. Fees are charged separately for makers and takers, and tiered rates are applied based on users' rolling trading volume over 14 days (Fees | Hyperliquid Docs - GitBook). Statistics show that Hyperliquid's base fee rate is highly competitive, approximately 0.005% for makers and 0.02% to 0.03% for takers (specific rates vary by tier) (What is Hyperliquid (HYPE)? The revolution of decentralized trading). This fee rate is lower than many centralized exchanges and also lower than major competitors like dYdX, thus attracting a large volume of high-frequency trading.

Fee Scale and Revenue: Due to the massive trading volume, even extremely low fee rates can generate considerable income. Third-party data shows that Hyperliquid's recent daily average fee income often reaches the million-dollar level. DeFiLlama statistics indicate that its 24-hour fee is approximately $1.17 million, with cumulative historical fees reaching $250 million (Hyperliquid Fees - DefiLlama). During peak periods, as trading volumes soared, daily income even exceeded $4.42 million (corresponding to a daily trading volume of about $21 billion) (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). According to BraveNewCoin, its 7-day fee income once reached $5.16 million (Experts Believe Hyperliquid Will Lead in Fee Generation by 2025). These data reflect that Hyperliquid has become one of the highest fee-generating platforms in the DeFi space (Experts Believe Hyperliquid Will Lead in Fee Generation by 2025).

It is important to note that in the context of decentralized protocols, "revenue" does not directly equate to team profits, as Hyperliquid is not a traditional company; its fee income is further distributed to ecosystem participants:

Community Returns: Hyperliquid returns a significant proportion of fee revenue to community users. For example, users who hold and stake HYPE tokens are eligible to receive platform fee dividends or rewards. Analysis from ChainCatcher mentions that the Hyperliquid team maintains a considerable annualized yield for its HLP (Hyperliquid Points or staking pool) through fees (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). This means a significant portion of fees is used for staking incentives, allowing token holders to share in the platform's growth dividends rather than all going to the team.
Listing Auction Revenue: The fees collected from the aforementioned Dutch auction for new token listings also count as a form of income. Reports indicate that recently, Hyperliquid's monthly spot listing auction fees have stabilized at over $100,000 (Is Hyperliquid's valuation reasonable? A quick look at its product ...). This scale can rival the explicit or potential listing fees of some leading centralized exchanges. However, this income does not become profit but enters the HLP treasury and ultimately "returns to the community in the form of staking rewards," forming a virtuous cycle (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). This model not only enhances HYPE staking returns but also ensures that the fees paid by project parties genuinely serve the community.
Other Potential Revenues: In addition to trading and listings, Hyperliquid has some marginal revenue channels. For example, the funding rates paid by users in contract trading (the funding fees exchanged between long and short positions) are usually settled between the trading parties, and the platform does not directly take a cut, but it can earn some profit by providing market-making funds (if there is an official market-making strategy). Additionally, Hyperliquid has launched Vaults and market maker support programs (documentation shows a Vaults module (Dual-block architecture | Hyperliquid Docs), which may charge certain management or performance fees. Furthermore, Hyperliquid may collaborate with cross-chain bridge service providers to extract a small service fee for large cross-chain deposits. However, these are relatively minor, with the main focus still on trading fees.

Profitability and Sustainability: The market is quite concerned about Hyperliquid's profitability, as it has not undergone VC financing and needs to support operations through its own revenue generation. According to PANews data, Hyperliquid's held assets and trading volume have grown rapidly, peaking at the end of 2024 but still remaining strong (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). For example, in December 2024, its daily trading volume reached a maximum of $10.4 billion, with recent daily averages also in the billions of dollars (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). Even with a conservative estimate of $500 million in daily trading volume and a combined fee of 0.02%, the annualized income would be around $36 million; in reality, its trading volume often exceeds this level. Therefore, Hyperliquid is fully capable of covering its operational costs (development team, server nodes, market expansion, etc.) and achieving surplus after deducting all returns. Considering the value of the 23.8% of tokens held by the team (Beginner's Guide to Hyperliquid | Trust), this also constitutes a major part of the team's long-term earnings—aligning their interests with the growth of platform value.

Official Disclosures and Market Valuation: Since Hyperliquid is not a publicly traded company, it does not have conventional financial reports, but its on-chain data is publicly transparent. The official team mainly discloses some financial-related information indirectly through community updates and governance discussions, such as staking pool yields and token buyback and burn. Market analysis estimates based on public data: some analyses compare Hyperliquid to centralized exchanges using exchange price-earnings ratio models, suggesting that its valuation should reference leading exchange levels. By the end of 2024, the fully diluted market cap of the HYPE token once reached $6 billion, sparking discussions in the industry about whether it is "overvalued or reasonable" (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). A report from PANews pointed out that comparing Hyperliquid's trading volume to Binance and others, its trading volume is about 6%-9% of Binance's, and its held funds are about 10%-12% of Binance's (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). This infers that the gap between it and centralized giants has narrowed to single-digit multiples. This is seen as an unprecedented achievement for decentralized trading platforms and is also the reason the market gives it a high valuation. Nevertheless, a high valuation also means that the market expects it to continue maintaining growth and profitability, placing higher demands on the Hyperliquid team to continuously expand users and revenue.

In summary, Hyperliquid's revenue model is "open-source" and prosperous: leveraging massive trading volumes to generate micro-profit fees, accumulating revenue over time, and using token economics to return profits to users and token holders, achieving a win-win for the community. Current data indicates that its revenue scale is already quite considerable, and the model of no VC dividend pressure and community profit sharing also contributes to its long-term sustainable development.

6. Investment Background and Operational History#

Financing and Equity: Unlike most star blockchain projects, Hyperliquid did not introduce traditional VC financing during its startup process. Reports indicate that it did not conduct any private rounds before launching its token in 2024, with no institutional or angel investors (Hyperliquid - Company Profile - Tracxn) (What Is Hyperliquid? - CoinLedger). This means the project is mainly funded by the founding team. Because there is no VC endorsement, Hyperliquid was relatively low-key in its early stages, but this also allowed for highly community-oriented token distribution: the official statement indicates that 75% of HYPE tokens will be allocated to current and future users (through airdrops, liquidity mining, community rewards, etc.) (What Is Hyperliquid? | CoinLedger). The specific token Tokenomics is as follows (Beginner's Guide to Hyperliquid | Trust):

Total Supply: 1,000,000,000 HYPE.
Genesis Distribution: 31.0% – This portion is mainly used for airdrops to early users and initial community distribution.
Future Releases & Community Rewards: 38.888% – Used for subsequent trading mining, liquidity incentives, user rewards, etc., ensuring long-term growth momentum for the platform.
Core Contributors: 23.8% – Allocated to the team and early contributors, representing the equity of the founding team.
Hyper Foundation Fund: 6.0% – As a reserve for project operations and ecological development, managed by the foundation.
Community Grants: 0.3% – Used for community developer rewards, hackathons, etc.
HIP-2 Reserve: 0.012% – (HIP-2 refers to the Hyperliquidity proposal, possibly for specific purposes).

From this, it can be seen that there are no explicit allocations to venture capital, supporting Hyperliquid's "no VC" strategy. The founding team holds about 24%, which is within a reasonable range and needs to create value through the project's success.

Founding Team and Background: The official team has not publicly disclosed detailed identities of the founding team. From public information, the founder is named Jeff (transliterated as "杰夫" in the Chinese community), who is said to have long been deeply involved in the crypto industry and has experience in top exchanges or trading platforms (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). Most other team members are anonymous, but it can be inferred that they include distributed systems engineers, former high-frequency trading system developers, and other high-level talents; otherwise, it would be difficult to build such a high-performance chain. Hyperliquid deliberately downplays individual prominence, focusing on the product itself and the community—this style is also reflected in its reliance on technology and data rather than celebrity endorsements or financing.

Development History:

Project Launch: According to reports from Bitget/Cointime, Hyperliquid officially launched its trading platform in February 2023 (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). In its early stages, its market share was very low (only about 0.3% of the decentralized perpetual market), but as a brand new category (self-developed chain DEX), it began to attract industry attention.
2023: In the first year after launch, Hyperliquid gradually accumulated popularity through continuous improvements in functionality and user experience. For example, it successively launched more perpetual trading pairs, improved cross-chain deposits, and introduced advanced features like limit orders and stop-losses. In the second half of 2023, with the market warming up and word-of-mouth spreading, its user growth accelerated. By the end of 2023, Hyperliquid had secured a place in the decentralized derivatives market, beginning to threaten dYdX's leading position.
2024: This year was a key period for Hyperliquid's rise. Around April 2024, reports indicated that Hyperliquid's trading volume had nearly caught up with its veteran competitor dYdX (with both capturing nearly 20% of the total decentralized perpetual market) (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). In the second half, Hyperliquid accelerated its efforts: it launched HyperEVM, making its mainnet EVM-compatible, greatly enriching ecological possibilities; it announced and implemented the HYPE token airdrop plan, rewarding a large number of early users and significantly stimulating community enthusiasm. When Hyperliquid officially conducted its token generation event (TGE) and opened trading on November 29, 2024, the community reacted enthusiastically, and the market cap of the HYPE token rapidly climbed, with trading volume surging accordingly. Statistics show that by mid-December 2024, Hyperliquid's user-held assets and trading volume reached their peak (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). For example, between December 17-20, daily trading volume exceeded the billion-dollar level, with various platform metrics hitting historical highs (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews).
End of 2024: Hyperliquid completed its so-called "epic airdrop" token distribution (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). A large number of real trading users received token rewards, achieving decentralized distribution and laying the foundation for future community governance. In mid-December, the team publicly unveiled the listing Dutch auction mechanism, sparking industry discussions while showcasing its innovative capabilities (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher). By the end of 2024, Hyperliquid had grown from an obscure new platform to a leader in the decentralized derivatives field, even beginning to compete with centralized exchanges.
Early 2025: Entering 2025, Hyperliquid continued to maintain a rapid growth momentum. On January 19, 2025, its perpetual daily trading volume set an astonishing record of $21 billion, capturing approximately 64.8% of the decentralized perpetual market (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). The next day, its daily fee income reached the aforementioned new high of $442,000 (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). At the same time, analysis pointed out that Hyperliquid has weakened the market share of centralized giant Binance in the derivatives market—Binance's share in the perpetual market has dropped from over 90% to about 57.8%, largely taken by Hyperliquid and others (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). During this stage, Hyperliquid began to solidify its leading position and promote itself to more global users (for example, through multilingual communities and tutorials, such as publishing beginner guides on TrustWallet (Beginner's Guide to Hyperliquid | Trust)).
Operational Time: By the first quarter of 2025, Hyperliquid's mainnet had been running for over two years. During this time, the platform has remained online 24/7, proving the stability of its self-developed chain architecture. The team has also demonstrated considerable professionalism in operations, maintaining a fast pace of product updates while also considering market and compliance aspects (for example, although it is a DEX, it provides a compliance-friendly interface with no obvious violations in design, and email registration may imply that it can upgrade when meeting KYC requirements).

Investors and Partners: Due to the lack of VC investment, Hyperliquid's support mainly comes from the community and strategic partners. Notably, some seasoned crypto figures have recognized it (such as the CEO of Moonrock Capital, who has paid attention to its mechanism innovation (Behind the $6 billion sky-high market value, Hyperliquid attempts to reconstruct the listing pattern of the cryptocurrency industry - ChainCatcher), but not as investors. The Hyperliquid team also places great importance on collaboration with market makers and liquidity providers, which is particularly crucial in the absence of equity financing. It can be inferred that several professional market-making institutions participated in providing depth during Hyperliquid's early launch (possibly through protocol incentives or sharing part of profits), thus ensuring the market operates positively. This close cooperation network is also part of its operational history.

In summary, Hyperliquid has taken a path of "technology-driven + community-led" development: zero VC, anonymous team, product-first, achieving exponential growth through excellent trading experiences and binding community interests. From being obscure to gaining widespread attention, its operational history itself has become a model for the industry, proving that decentralized exchanges can compete head-on with traditional giants.

7. Competitive Analysis: Comparison of DEXs and Hybrid Model Exchanges#

Hyperliquid operates in the cryptocurrency derivatives trading space, with competitors including other decentralized exchanges (especially perpetual contract DEXs), some semi-centralized/hybrid platforms, and traditional centralized exchanges. The following will analyze the main competitors, comparing their models, market performance, and advantages:

(1) dYdX: Established Decentralized Perpetual Exchange
Introduction: dYdX is a pioneer in the DeFi derivatives space, having launched as early as 2019. It is known for its perpetual contracts, dominating a significant portion of decentralized contract trading volume from 2021 to 2022. dYdX initially operated on the Ethereum Layer 2 network StarkWare, using an order book model but matching off-chain (on dYdX's official servers), which is a hybrid model: user funds are held and settled in smart contracts, but order matching is completed by centralized components. This design balanced performance and decentralization at the time but still had the flaw of a centralized single point (server trust).

Technical Comparison: At the end of 2023, dYdX released a brand new V4 version, migrating to a self-developed blockchain based on the Cosmos SDK, known as an "App chain." This makes dYdX V4 quite similar to Hyperliquid—both are order book DEXs on independent blockchains (The transformation of derivatives trading platform ownership - Followin). dYdX's new chain uses Tendermint consensus (also BFT-type), with block times of about 1-2 seconds, also achieving fast finality. The differences between the two lie in implementation details: Hyperliquid's chain is self-developed consensus and architecture, emphasizing ultra-low latency and dual-block mechanisms, while dYdX relies on the mature Cosmos framework, which is relatively conservative. However, both ultimately aim to create a chain tailored for high-performance decentralized trading. It can be said that dYdX is following the path that Hyperliquid has taken, just that the latter has taken the lead and gained an advantage.

Market Performance: Once, dYdX was undoubtedly the leader—its market share exceeded 80% during 2021-2022 (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). However, after Hyperliquid's rise in 2023, it quickly eroded dYdX's share, and by mid-2024, both were nearly equal (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). Entering the second half of 2024, as Hyperliquid exploded, dYdX's relative share continued to decline. According to early 2025 data, Hyperliquid captured nearly 2/3 of the decentralized perpetual market, while dYdX's share fell below 20% (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). However, dYdX's overall trading scale remains considerable: its total trading volume for 2024 was approximately $250 billion, with cumulative historical trading volume exceeding $1.47 trillion (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). This indicates that dYdX still has a large user base and liquidity, especially some loyal users and professional institutions may still be observing its V4 development. dYdX launched features like infinite markets (allowing anyone to launch new markets) and MegaVault in 2024, attempting to enhance platform appeal (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). The result was an influx of funds and revenue growth by the end of 2024 (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). dYdX reported that by the end of 2024, its protocol's annual revenue had grown to $45 million (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). In contrast, Hyperliquid may reach this revenue level in a single month by the end of 2024, highlighting the latter's rapid growth.

Features and Users: Both dYdX and Hyperliquid offer similar professional trading features, such as cross-margin and portfolio margin, facilitating advanced trading strategies (GMX or dYdX? : r/defi - Reddit). dYdX's advantages lie in its brand and community accumulation, as well as the governance token DYDX established ahead of time (issued since 2021). However, a considerable proportion of DYDX tokens are held by VCs and the team, while Hyperliquid's HYPE is more community-held (What Is Hyperliquid? | CoinLedger), which enhances Hyperliquid's reputation among decentralized enthusiasts. Additionally, dYdX's market openness is noteworthy: they have introduced a mechanism that allows almost anyone to create perpetual markets (by submitting proposals and automatically providing initial liquidity), aiming to enrich trading varieties. This contrasts with Hyperliquid's auction listing mechanism—one is Permissionless (no permission), while the other is Incentivized (competitive incentives). Both approaches have their pros and cons: dYdX's method is more decentralized and may launch a vast number of markets, but the risk is that too many markets with insufficient liquidity dilute users; Hyperliquid's method ensures that each listed project has "paid a price," usually meaning higher quality or at least financial backing, but it involves a selective listing process. Both models are currently being experimented with, and it remains to be seen which is superior.

Summary: As Hyperliquid's most direct competitor, dYdX shares a high degree of alignment in philosophy (building a top decentralized derivatives platform) and converging implementation paths (each creating high-performance dedicated chains). Hyperliquid has taken the lead with more aggressive performance optimizations and business strategies, but dYdX's team strength and resources should not be underestimated. The two may continue to compete in liquidity acquisition, product innovation, and user acquisition, which is beneficial for users—lower fees and better experiences will continue to emerge.

(2) GMX: AMM-Based Perpetual DEX
Introduction: GMX is a decentralized perpetual trading protocol running on Arbitrum and Avalanche chains. It employs a model completely different from order books: automated market maker (AMM) + oracle pricing. On GMX, users trade with an asset pool (called the GLP pool), and the trading price is calculated based on the on-chain oracle price plus a certain slippage. This avoids the complexity of order book matching, making the system simple, and small transactions often can be executed with zero slippage. However, large transactions may experience price impacts due to changes in pool reserves and require robust oracle support.

Comparison with Hyperliquid: GMX's advantages lie in its simplicity and robustness. Its architecture is based on a verified blockchain (Arbitrum/Ethereum), and the smart contract logic is relatively simple, with a smaller attack surface, and it does not have professional market makers dominating the market—any user can provide liquidity by holding GLP and earn fees. When users incur losses, LPs profit, and vice versa. This model shares market-making profits with community LPs, forming shared interests. On the other hand, Hyperliquid's order book model requires professional market makers to place orders to provide depth, which has a higher barrier to entry for ordinary users. However, the order book model is more efficient in price discovery and large transactions: GMX relies on external prices and cannot provide price discovery (it can only follow market prices), while Hyperliquid has matching, with transactions themselves driving price changes. Additionally, Hyperliquid's depth comes from market competition, potentially accommodating very large trades without oracle discrepancies; GMX may suffer severe losses or price decoupling if faced with extremely large trades.

Market Performance: GMX gained considerable popularity in 2022 due to its simplicity and practicality, becoming one of the leaders in DeFi derivatives. In 2023, during the Arbitrum ecosystem explosion, GMX's platform daily trading volume reached hundreds of millions of dollars. However, compared to Hyperliquid's astonishing growth, GMX's capacity appears limited. According to 2024 data, GMX's total trading volume for the year was approximately $250 billion, with peak daily trading volume around $700 million (in March 2024) (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). By the end of 2024, GMX's daily trading volume averaged around $200 million (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). Compared to Hyperliquid's daily volume in the billions (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews), it is not on the same scale (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). However, GMX has not stagnated; between 2023 and 2024, they launched V2, expanding the number of tradable markets (from initially supporting only a few varieties like BTC and ETH to now about 67 contract markets) (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News). Additionally, Arbitrum's official short-term incentive program also boosted GMX's trading volume in 2024 (ON–307: Derivatives Hyperliquid dYdX Drift ️GMX Orderly | Bitget News).

Unique Advantages: Despite not competing with Hyperliquid in trading scale, GMX still has its unique value propositions:

Yield-Generating Token Economics: 30% of the platform's fees are directly distributed to GMX token stakers, while GLP holders receive the remaining 70% of fee revenues. This means GMX/GLP holders have a continuous passive income, attracting many DeFi investors to hold long-term, viewed as an asset akin to "dividends." In contrast, Hyperliquid's HYPE requires staking and governance to obtain indirect returns, making the mechanism more complex.
No Market Making Required, High User Participation: Ordinary users can participate in market making and share profits simply by providing assets to mint GLP, without needing specialized knowledge. This community market-making approach gives GMX a more decentralized source of liquidity, not relying on a few market makers, which stands out from the perspective of censorship resistance and decentralization.
No Slippage on Small Transactions: GMX uses Chainlink oracles for pricing, allowing small transactions to be executed at market mid-prices with essentially no slippage, which is very appealing to small retail traders. While Hyperliquid may also have small spreads (due to good liquidity), it still inherently has bid-ask price differences.

Limitations: GMX also has obvious constraints:

Inconvenient for High-Frequency Trading: Due to the limitations of the underlying blockchain (such as Arbitrum's block time of about every 8 seconds), it cannot support the sub-second frequency of orders like Hyperliquid. Therefore, high-frequency and algorithmic traders rarely choose GMX, with this user segment mostly migrating to faster environments like Hyperliquid.
Capital Efficiency: GMX requires user assets to be idle in the GLP pool to prepare for counter trading, while Hyperliquid's funds only move when orders are executed; unexecuted portions do not affect the overall liquidity pool. Thus, from a system perspective, Hyperliquid is more efficient in capital utilization.
Extreme Market Risk: GMX has experienced significant losses in the GLP pool during extreme market conditions (for example, during the volatile price swings of certain altcoins), as LPs essentially bear the market-making loss risks. Hyperliquid's market-making is handled by professional institutions, and users do not directly bear market-making profits and losses.

Summary: GMX represents a decentralized but low-performance path, while Hyperliquid represents a high-performance but relatively professional path. During market booms, professional trading volumes (high-leverage, high-frequency, large amounts) clearly flow to Hyperliquid, while GMX serves more users who prefer yield generation and small, convenient transactions. The two have competitive and differentiated products: Hyperliquid resembles a professional exchange, while GMX is more like a trading + yield platform. In the future, both may learn from each other (GMX improving performance, Hyperliquid introducing more community liquidity mechanisms), but in the short term, Hyperliquid maintains a magnitude-leading position in derivatives trading (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews).

(3) Other Decentralized Derivatives Platforms:

Injective & Helix: Injective is a derivatives-specific chain in the Cosmos ecosystem, with the main application running on it being the Helix decentralized exchange, which also adopts an order book + matching model. Injective's mainnet launched earlier (in 2021), but initial market attention was average. After Hyperliquid's rise, Injective/Helix also saw some development in 2023-2024, but there remains a gap compared to Hyperliquid. Statistics show that by the end of 2024, Hyperliquid's trading volume had far surpassed that of other DEXs (Is Hyperliquid's valuation reasonable? A quick look at its product status and economic model - PANews). Injective's strengths lie in its openness to multiple applications and features like cross-chain contracts, but the single exchange Helix has not demonstrated Hyperliquid-level liquidity. Hyperli