Author:nairolf
Compiled by: TechFlow
"Friend, what is the bidding mechanism of Hyperliquid?"
Here's a (super) simple explanation of the HIP-1 proposal put forward by @HyperliquidX.
"What is this?"
HIP-1 is a standard for a fungible Token with limited supply.
It defines the rules for how Tokens are listed on the Hyperliquid platform. Tokens are sold through a Dutch auction, with each auction lasting 31 hours, and the starting price is twice the clearing price of the previous auction.
"I don't understand?"
Hyperliquid is an L1 blockchain with a built-in exchange.
It supports various perpetual contract trading, allowing users to go long or short on almost any Token, and use leverage. It also has a spot trading area, similar to Binance or Coinbase, but it is fully decentralized, hopefully this helps you understand.
"Okay, but how is it implemented?"
Since Hyperliquid is decentralized, a fair mechanism is needed to decide which Tokens can be listed, rather than a single team or individual deciding arbitrarily. This is different from centralized exchanges, which usually decide on listings based on fees or their own selection.
"How does it work specifically?"
Hyperliquid uses an auction mechanism to enable Token listings.
Essentially, a new "listing right" is publicly auctioned every 31 hours. The starting price is twice the clearing price of the previous "listing right" auction, and the price gradually decreases over time until someone purchases it.
"Can you give an example?"
Let's say you want to list your "XYZ" Token on Hyperliquid.
Directly contacting the team to request a listing won't work. Instead, you need to purchase a "listing right" by participating in the auction.
"How much will it cost?"
The first step is to check the clearing price of the previous "listing right" auction, let's say it was $69,420.
The starting price for the next auction will be twice that, which is $138,840.
This price will gradually decrease over time until someone decides to purchase it. After that, this auction process will repeat every 31 hours.
"So I can list my Token?"
Yes, that's right. Anyone can participate in the auction, and as long as they think the price is reasonable, they can purchase the "listing right" to have their Token listed on Hyperliquid.
The 31-hour interval ensures that not too many Tokens are listed, maintaining the scarcity and uniqueness of the platform's Tokens.
Summary
The auction mechanism of Hyperliquid determines the price at which new Tokens are listed on the spot exchange.
Each auction is subject to time and price constraints - an auction is held every 31 hours, with the starting price being twice the clearing price of the previous auction, and the price gradually decreasing until someone purchases it.
