Author: Mario @IOSG
Hyperliquid is a high-speed on-chain perpetual contract DEX operating on its proprietary Layer 1 blockchain. It delivers centralized exchange (CEX)-level performance while maintaining on-chain transparency.
Its native token, $HYPE, governs the network, reduces trading fees when staked, and captures value through auction-based buybacks.
The protocol’s core liquidity comes from the HLP Vault, a hybrid treasury combining market-making and liquidation functions, accounting for over 90% of TVL.
In March 2025, Hyperliquid faced a severe black swan event—the $JELLYJELLY market manipulation incident—which nearly triggered a cascade of vault liquidations.
The crisis exposed centralization risks in validator governance: Hyper Foundation intervened to prevent collapse, sparking decentralization debates.
Despite this, Hyperliquid rebounded swiftly, driven by whale loyalty and ecosystem expansion, achieving record highs in trading volume, open interest, and $HYPE price.
Today, the platform (including HyperEVM) hosts over 21 new dApps spanning NFTs, DeFi tools, and vault infrastructure, far exceeding its original scope as a perpetual exchange.
1. Where Do "Degen" Whales Trade?
James Wynn, a crypto-famous anonymous whale, turned $210 into $80 million in three years. His most legendary trade? Growing a $7,000 $PEPE position into $25 million while routinely leveraging 40x for nine-figure positions.
Wynn’s trading arena? Hyperliquid.
Anonymous whales like "Insider Brother" execute massive trades on Hyperliquid, with their positions now viewed as real-time market sentiment indicators.
Why Hyperliquid? High-risk traders flock here for:
- CEX-like speed and depth
- No KYC requirements
- Capital efficiency
2. What Is Hyperliquid?
Hyperliquid is a decentralized order-book-based DEX, not an AMM like Uniswap. It matches orders on-chain, settling trades within a single block.
Built on its custom Layer 1 blockchain, Hyperliquid achieves:
- 78% market share in on-chain derivatives (June 2025)
- $5.5B+ daily trading volume
$HYPE Tokenomics
- 10B total supply, with 70% allocated to community (31% airdropped to 94,000 users).
- No VC backing: Founder Jeffrey Yan (ex-HRT engineer) prioritized a user-owned ecosystem.
Utility:
- Governance: Vote on protocol upgrades.
- Fee Discounts: Staking reduces trading fees.
- Security: Stake to become a validator (10,000 $HYPE minimum).
3. Hyperliquid’s Unique Features
HIP-1 Auction: Decentralized Listings
New tokens are listed via Dutch auctions:
- Transparent, no insider deals.
- Fees fund $HYPE buybacks.
HLP Vault: Liquidity Backbone
Acts as both:
- Market maker: Provides order-book liquidity.
- Liquidator: Manages underwater positions.
Risks:
- Overconcentration: HLP holds ~90% of TVL.
- $JELLYJELLY Incident: Highlighted systemic fragility when HLP nearly collapsed.
4. Crisis Recovery: Why Users Stayed
Despite governance centralization, Hyperliquid retained users by:
- Whale Loyalty: Traders valued performance over decentralization.
- Operational Resilience: Validators manually intervened to save HLP.
- Ecosystem Growth: HyperEVM attracted 21+ new dApps, diversifying beyond perps.
Key Stats Post-Crisis:
- $HYPE hit $35 (all-time high).
- Open interest surged to record levels.
5. HyperEVM: The Next Growth Engine
Hyperliquid’s EVM-compatible smart contract layer supports:
- DeFi protocols (lending, DEXs).
- NFT projects (e.g., Milady spin-offs).
- Gas Fees: Paid in $HYPE (burned, creating deflation).
Emerging Tokens:
Projects like $LIQD (LiquidSwap’s governance token) offer high-beta exposure to ecosystem growth.
6. Conclusion: Hyperliquid vs. Binance
Hyperliquid isn’t just another DEX—it’s a CEX competitor with:
- $6.9M+ monthly fees (outpacing Solana, Tron).
- Full trading stack: Spot, perps, and EVM dApps in one interface.
Why It’s Unreplicable:
- Network effects: 80% market share in on-chain perps.
- Founder edge: Ex-HFT team designed for performance.
👉 Explore Hyperliquid’s ecosystem
FAQ
Q: Is Hyperliquid truly decentralized?
A: Validators have centralized control, but users accept this trade-off for speed and reliability.
Q: How does $HYPE capture value?
A: Via staking rewards, fee discounts, and HIP-1 auction buybacks.
Q: What’s next for Hyperliquid?
A: Expanding HyperEVM adoption and bridging more CEX users to on-chain trading.