Source: insights4.vc Translation: Shan Ouba, Jinse Finance
Hyperliquid has become a leading decentralized perpetual swap exchange over the past year, outperforming competitors in both performance and market share. Key metrics have increased exponentially since our December 2024 review:
Daily trading volume increased from billions of US dollars to an average of over US$10 billion, reaching a peak of over US$30 billion.
Open interest climbed from a few billion dollars to about $15 billion.
HYPE's market capitalization expanded from approximately $4 billion in fully diluted value at launch to over $16 billion in flow-through value as of August 28, 2025 (≈ $48 billion in FDV).
The infrastructure can now complete transactions in under a second (median ≈ 0.2 seconds) while processing approximately 200,000 orders per second.
Buybacks have reduced the total token supply by approximately 8% to 9%, supporting a 15-fold increase in the token price since its launch.
The market share of decentralized perpetual contract trading has jumped to approximately 75% to 80%, far ahead of dYdX, GMX and other competitors.
Hyperliquid has become the benchmark for on-chain transaction speed and liquidity. New challengers, such as Sei-based order-book decentralized exchanges or hybrid models, are emerging, and the first major token unlock in November 2025 is attracting much attention, but Hyperliquid maintains a commanding lead. Furthermore, Hyperliquid boasts the highest revenue efficiency globally, with a team size of just 12 and per capita revenue of $102.4 million. By comparison, Tether's revenue efficiency is $93 million; OnlyFans's is $37.6 million; Nvidia's is $3.6 million; Apple's is $2.4 million; and Meta's is $2.2 million.
Core Principles
Unlike venture-backed projects with locked-up allocations and token economics that favor insiders, Hyperliquid reserves 70% of the total supply for the community. No private rounds dilute user equity, ensuring broad and fair token distribution. By avoiding external capital, Hyperliquid aligns incentives with its user base and encourages organic network effects.
The Hyperliquid Labs team is a core contributor to Hyperliquid's development and is led by co-founders Jeff and iliensinc , both Harvard classmates. Team members hail from prestigious institutions like Caltech and MIT, and have experience at leading companies like Airtable, Citadel, Hudson River Trading, and Nuro.
The team initially focused on proprietary cryptocurrency market making in 2020, but pivoted to DeFi in 2022 due to frustration with the inefficiencies of existing platforms, including poor market design, inferior technology, and clunky user interfaces. Leveraging its expertise, the team aims to bridge the gap between decentralized and centralized trading experiences by building a seamless, efficient, and user-friendly product.
Hyperliquid's meteoric rise began with the "Genesis" airdrop on November 29, 2024, which distributed 31% of the 1 billion HYPE supply, valued at approximately $1.5 billion. The token opened at nearly $4.80, with trading volume reaching $165 million within the first hour. By mid-December, the exchange was seeing billions of dollars in daily liquidations and nearly $1 billion in deposits. Simultaneously, the HyperEVM, an EVM-compatible blockchain that shares state with the core order book chain, officially launched, laying the foundation for future DeFi applications.
In early 2025, the platform experienced structural growth. In January, the on-chain assistance fund began using transaction fees to repurchase HYPE tokens. The number of validators increased from 5 to 16, and a marketing campaign in Asia highlighted the platform's sub-second execution speeds. The HyperEVM officially launched on February 18, 2025, bringing the same rapid finality to Solidity contracts and transactions. In March, the platform added a validator voting mechanism, and total trading volume exceeded $1 trillion, with whale users demonstrating that nine-figure positions can be managed on-chain.
During April and May, monthly trading volume exceeded $200 billion, surpassing Robinhood's equity flow. Builder Codes also allowed external front-ends to leverage Hyperliquid's liquidity in exchange for a fee share. In June, the HIP-3 testnet opened up permissionless market creation, and the validator set reached the planned 21 independent nodes. Subsequently, new cryptocurrencies were listed, ranging from wrapped BTC and ETH to meme coins and the SPX Perpetual Index.
July's performance was crucial: monthly trading volume reached a record $330 billion, open interest exceeded $15 billion, and Hyperliquid's share of decentralized perpetual swap trading exceeded 75%. Media reports highlighted that just 11 core contributors generated approximately $1.17 billion in annualized revenue. In August, BitMEX founder Arthur Hayes predicted significant upside for HYPE, with daily trading volume reaching $12 billion and the token price reaching a new high of nearly $50. Institutional signals followed as BitGo and Phantom added custody and trading support. By August 28, 2025, the support fund had accumulated nearly 30 million HYPE, with staking participation reaching 43% of the supply. The team is currently focused on bringing HIP-3 to mainnet, furthering open source development, and preparing for the first major team vault unlock scheduled for November.
Architecture and performance
Hyperliquid runs on a purpose-built Layer 1 that combines HyperCore, a high-speed orderbook blockchain, with HyperEVM, an embedded EVM runtime. HyperCore uses a tendermint-like consensus mechanism, with a rotating rotation of 21 highest-stake validators processing all on-chain transactions, fund payments, and liquidations. Block times are approximately one second, transaction confirmations are approximately two-tenths of a second, and the matching engine has been load-tested to exceed 200,000 orders per second. Users pay no gas fees; fees are based on transaction volume and are used to pay validator rewards and the on-chain buyback treasury.
Because each market's order book is sharded in memory across validators, throughput headroom remains substantial, consuming only a small fraction of CPU capacity even on its busiest day (~$3 billion in volume). Horizontal scaling with additional matching engines is possible but not currently required. Finality is instant with signatures from two-thirds of validators, providing centralized exchange-like execution without the risk of chain reorganizations. Deterministic price-time prioritization and a single global order book minimize MEV; no exploits have been identified.
Risk management utilizes an on-chain, cross-margin model. Positions are checked against oracle prices every block, allowing anyone willing to assume the risk to liquidate. A small, protocol-run liquidation pool supports the entire liquidation process. Oracles combine internal transaction-weighted prices with external data sources like Chainlink or Python. Permissionless market operators must submit a HYPE security deposit of 1 million, and any incorrect data may result in penalties and slashing.
The HyperEVM resides within every HyperCore block, sharing the same validators and state, allowing smart contracts to communicate with the order book without cross-chain latency. Gas is paid using HYPE, resulting in conservative block gas limits and throughput comparable to fast sidechains, easily handling typical DeFi workloads. Assets are connected to the network via the HyBridge, which has been audited multiple times and remains bug-free. Delegated "session keys" enable traders to place orders without requiring a fixed wallet signature, supporting high-frequency strategies.
The network is remarkably resilient, with no outages and the ability to tolerate failures of up to one-third of its validators. Since launch, the number of validators has expanded from 5 foundational nodes to 21 independent operators, with approximately 43% of HYPE staked. Governance remains validator-centric, and the matching engine code is partially closed, with a commitment to fully open source after further field testing.
HYPE Token Economics
Supply and Current Float
Hard cap: 1B tokens, no inflation.
Airdrop at issuance (November 2024): 31% ≈ 310 million.
Circulating supply as of August 28, 2025: 334 million (33.4%). The slight increase from the airdrop reflects a small amount of liquidity mining release or overdue claims.
Locked: 666M (66.6%), roughly divided into 388.8M future rewards and 300M team/treasury.
Unlock Schedule
The team/funding block (≈ 300 million) is expected to vest on November 29, 2025 after a one-year cliff period, and then be released within 2-3 years.
In the future, the reward pool will be distributed through incentive plans based on the judgment of the foundation.
Staking and Trader Utility
Unlike many L1 tokens, HYPE initially offered no staking rewards to holders, as the first validators were run by the foundation. In January 2025, as the number of validators grew, HYPE's staking rewards became a significant factor: validators earn a percentage of transaction fees and share them with delegators. Hyperliquid distributes a fixed percentage of protocol fees to stakers/validators (the exact percentage has not been officially announced, but it's likely a small percentage, as the majority of fees go toward buybacks). Validators compete by offering high commissions to delegators. As of August 2025, staking rewards have not been publicly disclosed but are presumably relatively low (as the $1 billion+ in fees are primarily used for buybacks, not distributions). Staking is primarily motivated by governance rights and the prospect of HYPE's appreciation.
Fees, buybacks, and destruction
Transaction fees are primarily paid in USDC.
HIP-1 converts any spot market fees collected in token form into HYPE and burns it - ~360k HYPE has been burned to date.
The majority of protocol fees go to the on-chain Assistance Fund (AF). AF uses USDC to purchase HYPE on the market and then holds it. As of August 27, 2025, the HYPE balance was 29.8 million, effectively reducing the liquidity float to 304 million.
Outlook and Risks
There will be no ongoing emissions beyond the locked-in allocation, so the circulating supply will slowly grow until it is unlocked in November 2025.
Upcoming team unlocks could add ~25 million tokens per month through 2026. Hyperliquid’s buyback rate (~$100 million per month) will need to match the pace of any sell-offs to avoid price pressure.
AF’s growing funds combined with a high staking rate help keep market supply tight, but transparency into the exact vesting schedule will increase visibility.
Liquidity as a Service: The “AWS of Liquidity” Concept
AWS revolutionized computing by abstracting bare metal servers, enabling developers to focus on business logic rather than infrastructure. Hyperliquid applies a similar logic to liquidity. Developers building on Hyperliquid don't need to re-architect order book logic, liquidity incentives, or complex backend systems. Instead, they gain access to readily available liquidity pools and order matching infrastructure at the protocol level.
The builder code is a key innovation. It enables third-party developers, regional exchanges, and specialized front-ends to integrate directly with Hyperliquid's order book. Each builder can define its own fee structure and user interface, without requiring custodial control over user funds. This model significantly lowers the barrier to entry and has enabled thousands of exchanges to flourish—each tailored to a specific user base, region, or trading strategy, yet all leveraging Hyperliquid's deep liquidity.
EVM compatibility ensures that lending protocols, stablecoins, yield aggregators, and insurance products can interoperate with Hyperliquid's liquidity engine. This composability creates a "financial Lego" environment where advanced strategies like automated hedging, cross-margin, and yield optimization will naturally emerge. Over time, this could give rise to a new class of DeFi primitives, built around liquid, real-time markets.
Growth and Distribution
Hyperliquid's expansion relies on several well-timed initiatives:
Early Points Campaign (June-November 2023): A large volume-based points campaign later became the HYPE airdrop, attracting approximately 50,000 active addresses.
Referral and Fee Discounts (starting December 2024): 4% lower fees for new traders and 10% lower fees for referral recipients to incentivize influencers, Telegram groups, and Discord servers to drive traffic.
Building the Code (mid-2025): Teams that embed Hyperliquid into custom wallets, analytics dashboards, or bots will receive a 20% to 50% commission share. Integrations with Phantom and other front-ends will quietly direct users to the exchange.
In addition to these incentives, community-led trading competitions, research reports, and endorsements from prominent figures like Arthur Hayes have helped it win over quantitative funds and proprietary traders. This has been further amplified by the presence of centralized exchanges in regions like China, South Korea, and Turkey, particularly where these on-chain exchanges face less regulatory pressure than offshore centralized exchanges.
User groups and behavior
As of August 2025, there are 640,000 unique transaction addresses (approximately 200,000 real users), compared to 200,000 a year ago.
Monthly active traders are estimated to be in the tens of thousands, with whales accounting for the majority of trading volume; the Pareto effect dominates.
Retail interest is reflected in the over 400,000 spot USDC holders on HyperCore, but many are simply holding to stablecoins or farm proceeds rather than trading.
The growth rate of trading volume is faster than the growth rate of user numbers, which means that the retention rate of existing professional users is high and the usage rate will be higher. The main challenge now is how to convert a large number of passive retail investors into active traders without weakening the professional advantages of the platform.
Hyperliquid has scaled rapidly by rewarding early adopters, outsourcing user acquisition to referrers and builders, and maintaining visibility through expert reviews rather than flashy marketing. To kickstart the next wave of growth, it needs a simpler experience or campaign to entice its massive passive user base to actually trade.
Competitive Landscape
The decentralized perpetual swap exchange market in 2025 is highly competitive, but Hyperliquid remains a distant leader in terms of trading volume and market share. However, it’s still instructive to compare it to its major competitors in the DeFi and CeFi sectors.
Hyperliquid leads in on-chain metrics (with trading volume approximately five times that of its closest on-chain competitor, Drift, and approximately four times that of dYdX). Its liquidity (spread/depth) is among the best among DEXs, thanks to its custom-built chain and strong market maker (MM) support. Only Binance and OKX boast higher raw liquidity, but Hyperliquid is closing the gap with top assets. In terms of finality, Hyperliquid and Solana (Drift) are the fastest on-chain; other DEXs, such as those based on Arbitrum, experience slight delays.
Decentralization: GMX and Vertex rely on Arbitrum (which owns the core elements), while dYdX operates on a separate blockchain (with around 16 validators—somewhat similar to HL in its early stages). Hyperliquid has 21 validators, comparable to some mid-sized POS blockchains (e.g., Tron has 27 SRs). It's not yet as decentralized as Ethereum or Solana, but likely more so than any competitor except Drift (which inherits Solana's large validator set).
Token Burn/Value: Hyperliquid uniquely has a direct revenue buyback mechanism, which benefits HYPE. dYdX's token is solely for governance and has a high issuance (they terminated their rewards mechanism but have not burned fees—fees go to the community treasury and are not currently redistributed). GMX has a strong token model (GMX stakers earn real returns in ETH), which has helped it remain popular despite declining trading volume. However, GMX's growth has stagnated relative to HL due to declining GLP yields (GLP is now ~10% APY, compared to ~20% previously, due to slower trader losses). HL's HLP yield has historically been ~100% (not directly distributed to HYPE holders, but can be simulated by holding HLP).
New entrants (such as GTE): GTE is a brand new on-chain trading platform on MegaETH that bundles a launch platform, an automated market maker (AMM), a centralized limit order book, and a price aggregator, in direct competition with Hyperliquid's "perpetual contracts first" model. GTE claims that its performance is comparable to that of a centralized exchange (CEX) and is fully non-custodial in execution, processing 100,000 orders per second with a latency of approximately 1 millisecond, and routing orders to the best price through platform scanning. In June 2025, GTE completed a US$15 million Series A financing round led by Paradigm, and received support from top market makers and funds. It is currently online on the testnet. Strategically, GTE's competitive advantage lies in its complete token life cycle from listing to spot to leverage, while Hyperliquid focuses on high-performance perpetual contracts and has a mature liquidity moat.
Centralized vs. decentralized: Several comparisons that need to be emphasized:
Trading Volume: Hyperliquid's daily trading volume is approximately $10 billion (August average), while Binance's is approximately $80 billion. Hyperliquid accounts for approximately 12% of Binance's futures trading volume. This is a significant figure considering Binance's years-long lead and broader asset offering. Hyperliquid's share is likely to continue growing, as its trend is upward. If the cryptocurrency market enters a strong bull run, Binance's daily trading volume could reach $200 billion, while Hyperliquid's daily volume could regularly reach $30 billion (sometimes, as Coindesk puts it, "comparable to the largest centralized exchanges").
Users: Hyperliquid's user base (hundreds of thousands) pales in comparison to Binance's approximately 150 million registered users. However, DeFi sometimes prioritizes the quality of trading volume over the quantity of users—a handful of quantitative firms on Hyperliquid can generate the equivalent volume of millions of retail traders on Binance. However, for a sustainable ecosystem, expanding the user base remains crucial (especially in terms of decentralization—thousands of small traders mean less risk of volume concentration).
Feature Set: Many CEX features (stop-loss, take-profit, advanced order types) are already implemented in Hyperliquid. It also offers one-click trading. In comparison, dYdX and other platforms have historically had limited order types (dYdX v4 improved this, but Hyperliquid has been ahead of the curve since day one, offering, for example, bracket orders). GMX still lacks advanced orders (beyond basic stop-loss as a separate trigger condition). This CEX-like sophistication is another reason for quantitative traders to migrate to Hyperliquid.
Competitive Moats and Risks:
Hyperliquid's moat: Liquidity + Performance + Brand recognition in the DeFi space today. Furthermore, as a proprietary chain, if competitors want to replicate it, they either need to launch a similar chain (which is difficult to bootstrap liquidity now that HL is already established) or attempt to replicate it on L2 (but performance will suffer).
However, competition from CeFi: Binance isn't standing still. It has launched some DeFi-like projects, but hasn't made significant progress in actual implementation. If Binance feels threatened, it might list the HYPE token and absorb HL's liquidity through cross-listing (this is just speculation). Or, more likely, Binance might further reduce fees or run promotions to retain traders on the platform.
Competition from other DeFi natives: Another competitive category is protocol-controlled perpetual swaps (for example, Perennial offers a different design that uses long-lived pools instead of order books to reduce slippage). So far, no DeFi native has challenged HL in terms of trading volume. However, new ideas may emerge, such as "RFQ-style perpetual swaps" or "pure on-chain high-frequency trading via L3."
dYdX vs. Hyperliquid: dYdX is conceptually closest (custom on-chain order book perpetual contracts). However, in terms of trading volume and technology, dYdX is slightly behind (the dYdX chain is based on the Cosmos system, with a 2-second block time and slower finality, and its token economics (high inflation for stakers) are considered weaker). However, dYdX has a strong brand and regulatory credibility (they have geo-fenced the US from day one, which may give them higher returns on compliance). If dYdX can revitalize itself (for example, by adjusting its token value accumulation mechanism, adding features like spot trading, or operating on a multi-vendor platform), it may be able to regain market share. However, as of now, dYdX's market share has plummeted from around 60% in early 2024 to less than 20%, while Hyperliquid holds over 75%—a significant shift.
Centralized Finance (CeFi) Crackdown/Regulatory Arbitrage: If centralized exchanges (CEXs) are subject to regulatory restrictions (such as KYC requirements or leverage limits), traders may increasingly turn to decentralized exchanges like HL for freedom. This is already happening in part due to derivatives restrictions in the US and EU. This macro tailwind favors HL. Conversely, if regulators specifically target DeFi violators, HL, as the largest offender, will become a primary target (see the next section).
In summary, Hyperliquid currently outperforms its DeFi competitors across all key metrics and is encroaching on the market share of centralized incumbents. The listed competitors (dYdX, GMX, etc.) each have their own unique advantages (such as GMX's community and token yields, and dYdX's existing user base), but none can match Hyperliquid's combination of speed, liquidity, and aggressive token buybacks. Unless a new paradigm emerges (such as true on-chain order books on Ethereum Layer-2, if feasible), the competitive landscape will likely ultimately position Hyperliquid as the leader, with dYdX and a few other platforms relegated to a distant second tier. Hyperliquid's task is to maintain this leading position—which means continuously optimizing its technology, keeping market makers happy, and safely navigating regulatory challenges so that users can continue to use it with confidence.
Key Metrics
