Summary
Hyperliquid is an innovative decentralized platform focused on efficient perpetual contract trading, providing a perpetual contract, spot trading, and low-latency, high-throughput Layer 1 chain trading environment. It uses HIP-1 and HIP-2 to enhance liquidity, with no KYC required and low fees. It supports the development of DeFi applications on HyperEVM and incentivizes community participation through the HYPE Token. As of December 2024, it has 230,000 users, $500 billion in trading volume, and $1.12 billion in USDC assets. The ecosystem includes projects like PURR, HFUN, and farms. The 1 billion HYPE Tokens are distributed in various ways to incentivize ecosystem development. The team, led by Jeff, is composed of trading experts, rejects external investment, and is dedicated to becoming a top-tier high-performance public chain focused on user experience and decentralization principles to attract more users and developers.
Project Introduction
Hyperliquid is an innovative decentralized trading platform focused on efficient perpetual contract trading. It has attracted significant user and investor attention through its unique liquidity aggregation technology and the distribution strategy of its native HYPE Token.
Website: https://app.hyperliquid.xyz/
Twitter: https://x.com/HyperliquidX
Figure 1 Hyperliquid Product Development
I. Product Features
Perpetual Futures Trading: Users can trade perpetual contracts with no expiration date on Hyperliquid, with up to 50x leverage.
Spot Trading: In addition to derivatives, Hyperliquid also supports spot trading, allowing users to directly buy and sell crypto assets.
High-Performance L1 Chain: Hyperliquid is built on its dedicated Layer 1 blockchain, supporting high throughput and low latency for a near-instant trading experience.
HIP-1 and HIP-2 Standards: HIP-1 allows the deployment of native Tokens and the creation of spot order books. HIP-2 is the "Hyperliquidity" mechanism, providing an innovative way to ensure liquidity by permanently locking it in the spot order books of HIP-1 Tokens.
Non-KYC Trading: As a decentralized platform, Hyperliquid does not require user identity verification (KYC), providing higher privacy protection.
Low Fees: Hyperliquid has set relatively low trading fees, especially with a negative fee model for market makers, incentivizing users to provide liquidity.
HyperEVM Support: Hyperliquid supports an enhanced EVM, allowing developers to build various DeFi applications that can seamlessly integrate with native components.
Community Participation and Rewards: Through a points system and airdrops, Hyperliquid encourages user participation and contribution to the ecosystem development. The HYPE Token distribution strategy is also designed to incentivize long-term community engagement.
II. Advantages of HyperLiquid
Decentralization and Transparency: As a decentralized platform, Hyperliquid provides fully transparent transaction records and a non-KYC trading experience, enhancing user privacy and security.
High-Performance Trading: Built on its dedicated Layer 1 chain, Hyperliquid supports high throughput and low latency, providing fast trade execution and reducing slippage.
Innovative Liquidity Mechanism: Through the HIP-1 and HIP-2 standards, Hyperliquid has introduced a new liquidity model, "Hyperliquidity," to ensure market depth and stability.
Low Trading Fees: The negative fee strategy for market makers and the overall low-fee structure significantly reduce trading costs, attracting more traders.
Diverse Trading Products: Supporting perpetual contracts and spot trading, Hyperliquid meets the diverse trading needs of users.
User Incentives: Through the distribution of HYPE Tokens and community participation rewards, Hyperliquid incentivizes users to engage and contribute long-term, building an active ecosystem.
Community Governance: In the future, Hyperliquid will introduce a community governance mechanism, allowing HYPE Token holders to participate in platform decision-making.
EVM Compatibility: The HyperEVM supports developers and applications in the EVM ecosystem, expanding its potential applications in the DeFi space.
Compliance and Openness: Despite being decentralized, Hyperliquid is also committed to compliance, ensuring its services can operate legally globally.
Figure 2 HyperLiquid's Technical Principles
Source: HyperLiquid
III. Data Analysis
Hyperliquid is customized as a high-performance derivatives trading Layer 1 exchange and is EVM-compatible. Assets are deposited into Hyperliquid mainly through the Arbitrum Bridge, currently supporting USDT, USDC.e, and USDC assets on Arbitrum, but only USDC as collateral. As of December 14th, the Hyperliquid Deposit Bridge contract 0x2D...3dF7 held $1.12 billion in USDC, still in a growth trend. Comparing Hyperliquid's asset deposits to CEX clean assets, it would rank 14th globally, surpassing MEXC (about $1.09 billion), with Bitget (about $3.27 billion) as the next target.
Figure 3 Comparison of HyperLiquid and CEX Asset Deposits
Source: @defloasis
Overall data: As of December 14th, HyperLiquid has reached 230,000 total users and $500 billion in total trading volume.
Figure 3 HyperLiquid Overall Data
Source: HyperLiquid
Hyperliquid Assistance Fund has generated over $82 million in profits
The Hyperliquid Assistance Fund's capital mainly comes from the platform's contract trading revenue, with a portion of the USDC fees going into the fund to support various platform activities, primarily HYPE Token buybacks. According to the hypurrscan browser, from December 5th to December 9th, 19:00 UTC+8, the Assistance Fund repurchased 567,083.22 HYPE Tokens from the secondary market, with a value of $7,364,369.45 and an average price of around $12.99.
Figure 4 Hyperliquid Assistance Fund Capital Changes
Source: defioasis
IV. Token Ticket Auctions to Acquire Spot Listing
Projects wishing to list on Hyperliquid need to obtain the right to issue new Tokens through a Dutch auction mechanism, typically held every 31 hours. Historically, Hyperliquid has focused more on derivatives trading, and Token Ticket auctions have been dominated by meme projects, with auction prices rarely exceeding $20,000. However, with the wealth effect and hype brought by the HYPE TGE, as well as the opening of the Hyperliquid EVM, more diverse projects are expected to consider issuing Tokens on Hyperliquid. Additionally, some previously low-priced Tickets may be acquired by official projects in the future, becoming a shell for listing on Hyperliquid at a higher price.
In recent auctions, the clearing prices have risen significantly, with the "SOLV" Token Ticket setting a new Hyperliquid auction record of $128,000 on December 6th. Given that Solv Protocol is about to have its TGE, this "SOLV" is likely to be the same SOLV, making Solv Protocol the first major project to list on Hyperliquid.
Hyperliquid Ecosystem Analysis
Many people see Hyperliquid as a decentralized derivatives exchange, but its essence is a 0-gas high-performance Layer 1 blockchain. The $HYPE Token market cap has already reached $20 billion, which can be directly compared to Sui and Solana. Many high-quality projects have emerged in the ecosystem, such as PURR, HFUN, and farms.
1. The meme leader of the ecosystem: PURR
Twitter: https://x.com/hyperintern
This is the leading meme project of hyperliquid, with a market capitalization of up to $340 million and a daily trading volume of $65 million, which is already of a large scale.
2. Token Issuance Platform in the Ecosystem: HFUN
Website: https://hypurr.fun/
It can be simply understood as the pumpfun on the Solana chain. The current market capitalization is $150 million, with a daily trading volume of $20 million.
3. The First AI Agent Project: farm
Twitter: https://x.com/thefarmdotfun
It can be simply understood as projects like ai16z or virtual, with a current market capitalization of $36 million and a daily trading volume of $43 million.
Overall, HyperLiquid's decentralized derivatives business has been very well developed. Both the user experience and liquidity are top-notch. But the ecosystem is still on the eve of an outbreak.
Figure 5 HyperLiquid Market Data
Data source: HyperLiquid
Token Economic Model
Total Supply: The total supply of HYPE Token is 1 billion.
Token Allocation: Genesis Distribution: 31% of the tokens (310 million) are allocated to users participating in the genesis event, and these tokens are fully unlocked.
Future Emissions and Community Rewards: 38.888% of the tokens are used for future emissions and community incentives, including distribution through activities, points, and participation rewards.
Core Contributors: 23.8% is allocated to the team and early contributors, and these tokens will be locked for one year after the genesis, with most unlocking in 2027-2028, and some continuing to unlock after 2028.
Hyper Foundation Budget: 6% is used to support the development and ecosystem building of Hyperliquid.
Grants: 0.3% is used to provide funding for community projects.
Hyperliquidity (HIP-2): 0.012% is allocated to the "Hyperliquidity" mechanism, which is used for permanent liquidity locking.
Utility: Transaction Fees: HYPE Token can be used to pay transaction fees and trade on the Hyperliquid platform.
Governance: A governance mechanism may be introduced in the future, allowing HYPE Token holders to participate in platform decision-making.
Incentives: A points system and airdrop activities are used to incentivize user participation and liquidity provision.
Points System: Points can be earned through trading volume, participation in activities, etc., and these points can be converted into HYPE Tokens or other rewards, promoting user activity and the healthy development of the platform ecosystem.
No Private Sale or CEX Allocation: Hyperliquid has not reserved HYPE Tokens for private investors, centralized exchanges, or market makers, in order to maintain its decentralized philosophy.
Team Background
The Hyperliquid team is composed of experts who have served as market makers on centralized exchanges, and they have provided services for multiple large platforms from 2020 to 2022. The only publicly named individual is the founder of HyperLiquid, Jeff (https://x.com/chameleon_jeff).
Investment and Financing Background
None, Hyperliquid has not accepted any institutional investment.
Project Summary
The ultimate goal of HyperLiquid is to build a top-tier high-performance Layer 1 public chain. The founder, Jeff, learned from the predicament of decentralized derivatives exchanges where no one traded after airdrops, that only by putting users first can a project truly be guaranteed to grow better and better. So the project has refused all investment institutions and cooperation, and has not actively listed on any centralized exchanges. Instead, it has directly airdropped 31% of the tokens to users. The project also maintains ultra-low transaction fees and 0 gas fees, which is the ultimate form of a decentralized derivatives exchange. As the project's ecosystem is improved, more top-tier developers and users will enter the HyperLiquid ecosystem.
