Author: Biteye core contributor Louis Wang
Editor: Biteye core contributor Denise
While most DeFi projects celebrate breaking 10,000 daily active users, Hyperliquid is quietly processing over $1 billion in daily trading volume. This 10-person team, led by Harvard physics Olympiad gold medalist Jeff Yan, demonstrated a simple truth by rejecting VC funding: true innovation does not require capital support, but rather a dedication to technology and a deep understanding of user needs.
HYPE token price $42.5, market cap $14.2 billion, ranking 12th among all cryptocurrencies; cumulative trading volume $2.2 trillion, capturing over 70% of the DEX perpetual contract market; user base grew from 350,000 in 2024 to over 600,000 active wallets in 2025; perpetual contract trading volume has reached 10% of Binance. Behind these impressive numbers is a story about how technological innovation is redefining decentralized finance.
01 Explosive growth market data
1.1 Astonishing growth in trading volume
In just two years, Hyperliquid grew from zero to over 600,000 users, with a growth trajectory that can be described as phenomenal. In 2023, the project was quietly launched without a press conference or marketing budget, Jeff Yan simply "opened the door and observed the changes." However, the results were explosive: within just 100 days, the daily trading volume exceeded $1 billion. On January 19, 2025, the platform set a historical trading record of $21 billion in a single day, and in July, it reached a new monthly trading volume high of nearly $320 billion, up 47% from June's $216 billion. This trading volume brought Hyperliquid's market share relative to Binance to 11.89%, reaching a new high, while Binance's perpetual contract trading volume during the same period was approximately $2.59 trillion. Recent data shows that the cumulative trading volume has surpassed $2.3 trillion, with open contracts reaching $15.2 billion.
Volume and OI of HL, https://stats.hyperliquid.xyz/
Currently, HyperLiquid has captured over 70% of the market share in the decentralized perpetual contract market, reaching one-tenth of Binance.
Perp dex market share, https://dune.com/uwusanauwu/perps
As analysts point out: "No DEX has ever been so close to the trading volume of a top CEX," Hyperliquid has begun to directly challenge traditional centralized exchanges on certain metrics.
02 Why is Hyperliquid able to capture market share?
2.1 A free trading experience without KYC
Unlike traditional centralized exchanges, Hyperliquid offers a truly permissionless trading experience. Users only need to connect their wallets to start trading, without cumbersome identity verification processes. This freedom attracts a large number of traders who value privacy and convenience, especially those unwilling or unable to complete KYC.
2.2 Greater position flexibility
Traditional centralized exchanges often impose heavy restrictions on large trades and high-leverage operations, whereas the decentralized nature of Hyperliquid allows users to open larger positions. The platform supports up to 50x leverage, and the restrictions on trade size are more lenient, making it highly attractive to professional traders and institutional investors.
2.3 Fully transparent on-chain execution
All orders, cancellations, trades, and settlements are transparently executed on-chain, allowing users to verify the fairness of transactions in real-time. This transparency is especially valuable after the collapse of centralized platforms like FTX, providing users with a foundation of trust.
2.4 Revolutionary breakthroughs in technical performance
Hyperliquid addresses the fundamental performance issues of DeFi trading through its self-built Layer 1 blockchain:
Trading speed: sub-second confirmation, comparable to top CEX
Throughput: 200,000 TPS, far exceeding the 2,000 TPS of other DEXs
Gas fees: completely free for users
Order book: fully on-chain, real-time matching
Jeff Yan identified the problems with traditional blockchain: "Ethereum is too slow. Layer 2 solutions add latency. Solana is relatively fast, but still not fast enough for serious trading." Therefore, he decided to build a blockchain designed specifically for trading from scratch.
03 The innovative Vault mechanism: a double-edged liquidity solution
3.1 HLP Vault operation principle
Hyperliquid's HLP (Hyperliquid Liquidity Provider) gun pool is the core of the platform's liquidity system. This mechanism automatically executes market-making strategies through algorithms, providing deep liquidity for the platform while allowing ordinary users to participate in professional-level market-making profits.
Advantages of the Vault mechanism:
Providing stable liquidity support for the platform
Allowing ordinary users to participate in professional market-making strategies
Transparent earnings, fully traceable on-chain
Effectively reducing trading slippage
As shown in the figure, a single trade of $100,000 in BTC or ETH on HL can achieve 0 slippage.
Slippage for different amounts of trades https://stats.hyperliquid.xyz/
3.2 Risk exposure of counterparty mechanisms
However, the Vault mechanism also brought systemic risks, which were fully exposed in the JELLY incident in March 2025.
Review of the JELLY attack incident:
On March 26, 2025, an attacker controlled 124.6 million JELLY tokens, first selling them in large quantities to drive down the price, causing HLP to passively take on a $15.3 million short position, then buying large amounts on the decentralized exchange to drive the price up. The price of JELLY skyrocketed 400% within one hour, and HLP's unrealized loss reached as high as $13.5 million.
At that time, HyperLiquid was facing an unprecedented public relations crisis, and the price of HYPE tokens had fallen to historical lows (which in hindsight was the best buying opportunity). However, HyperLiquid responded quickly to the crisis: validators reached consensus in 2 minutes, urgently taking down the JELLY market; all positions were forcibly closed at the attacker’s opening price; Hyper Foundation promised to compensate all normal users.
The system mechanism of HLP was also rapidly improved after this crisis:
1. ADL mechanism optimization: no longer based on overall asset calculations, but separately monitors liquidation pool losses.
2. Strengthened position restrictions: Reassessing risk parameters for low market cap tokens
3. Strengthened liquidation mechanisms: reducing the proportion of liquidation pools to minimize risk exposure
HLP TVL, https://defillama.com/protocol/hyperliquid?tvl=true&events=false
Post-incident recovery data shows: TVL has recovered from a low of $19.7 billion to $20.8 billion, HLP assets fully recovered to $19.5 billion, and trading volume rebounded from $50 million/day to a stable $140 million/day, demonstrating the platform's strong resilience.
04 Revolutionary value capture: redefining token economics
4.1 Unprecedented buyback commitment
While most DeFi projects are still arguing about how to allocate protocol revenue, Hyperliquid made a shocking decision: to use 97% of protocol revenue for HYPE token buybacks.
Based on the platform's 7-day average trading volume, Hyperliquid repurchases approximately 76,000 HYPE tokens daily, with an annualized buyback rate reaching 4.7% of the circulating supply. The cumulative buyback value has exceeded $900 million, and currently, 41.85% of the total supply is staked and locked, creating a strong supply contraction effect.
Hyperliquid buyback records, https://data.asxn.xyz/dashboard/hl-buybacks
The brilliance of this design lies in directly converting the platform's commercial success into an increase in token value. As trading volume grows, the buyback intensity automatically increases, forming a positive value cycle. This is not a simple deflationary mechanism but a real dividend model that directly returns protocol income to token holders.
4.2 Multi-dimensional value realization
The value capture of the HYPE token is not limited to buyback and destruction; as a Layer 1, it also has node staking rewards, with the yield design referencing Ethereum's PoS consensus mechanism, where the yield is inversely proportional to the square of the number of staked HYPE tokens, currently around 2.2%. On-chain data shows that over 32 million HYPE tokens are already participating in staking, accounting for approximately 42% of the circulating supply, of which 23% is liquid staking (e.g., kHYPE).
HYPE node staking yield, https://app.hyperliquid.xyz/staking
4.3 A brave experiment rejecting VC
In an industry dominated by venture capital, Hyperliquid chose a completely different path. The project allocated 70% of the tokens to user airdrops and community rewards, 23.8% to the team and core contributors, 6.2% for future development funds, while the proportion of VC investment is zero.
The revolutionary nature of this allocation model lies in its complete avoidance of the VC sell-off pressure faced by traditional projects. In traditional models, VCs often sell off large amounts of tokens for profit after the tokens go live, while Hyperliquid's model ensures the stability of token prices, allowing real users and builders to become the biggest beneficiaries. As Jeff Yan said, allowing venture capitalists to hold large stakes in a decentralized network would become "a scar on the network."
05 HYPE Token: An undervalued value pit
5.1 Investment logic supported by strong fundamentals
From a purely investment perspective, the HYPE token possesses all the elements of a successful investment target. First is a strong business foundation: the platform's annual revenue has reached $577 million, and this figure only comes from trading fees, excluding other potential revenue sources. The user base has rapidly grown from 350,000 active wallets in 2024 to over 600,000 in 2025, with user retention rates ranking among the best in the industry.
More importantly, this growth is based on real product value rather than speculative hype. Hyperliquid's market share continues to expand and has begun to directly challenge traditional centralized exchanges on certain metrics, providing immense room for future growth.
Since the beginning of the year, HYPE has risen about 83%, significantly outperforming Bitcoin and Ethereum. The high correlation of 0.703 with Bitcoin indicates that HYPE enjoys additional gains driven by its fundamentals while benefiting from the overall rise of the crypto market.
5.2 Long-term value built on a technical moat
The investment value of HYPE comes not only from short-term business growth but more importantly from the technical moat built by Hyperliquid. The self-developed Layer 1 blockchain, a processing capacity of 200,000 TPS, and sub-second transaction confirmations are technical advantages that other projects cannot replicate in the short term.
In a homogeneously competitive DeFi market, Hyperliquid has established a real differentiation advantage through technological innovation. The value of this moat will continue to amplify over time, providing solid support for the long-term value of the HYPE token.
5.3 HIP-3: Building a new infrastructure for financial innovation
The HIP-3 proposal represents Hyperliquid's strategic transformation from a trading platform to financial infrastructure. This mechanism allows anyone to create custom perpetual contract markets on the platform by staking 1 million HYPE tokens, including setting price oracles and contract specifications.
This innovation addresses the core pain points created by traditional financial markets. In the traditional system, the launch of new financial products requires a long regulatory approval process, incurs huge costs, and is often limited to large financial institutions. HIP-3 provides a permissionless market creation platform where any innovator can quickly validate and deploy their financial product ideas.
From a business model perspective, HIP-3 has created a brand new value capture mechanism. The creation of each new market requires a large amount of HYPE tokens to be staked, creating a continuous and rigid demand for the token. At the same time, market creators can earn a portion of the fee income from the markets they create, forming a benefit-sharing mechanism between innovators and the platform.
For the value of HYPE tokens, HIP-3 marks the diversification of demand drivers. In addition to trading fees and staking rewards, market creation demand will become a new growth point for token value, providing a more solid foundation for long-term value growth.
5.4 Pre-IPO trading: Breaking traditional investment barriers
Based on the HIP-3 mechanism, a revolutionary application case has emerged in the Hyperliquid ecosystem: the Ventuals platform. This protocol provides a decentralized solution for one of the most closed-off areas in traditional finance—pre-IPO trading.
Pre-IPO trading refers to the trading activities of shares or related derivatives of a company before it officially goes public. This asset class, valued at trillions of dollars, has long been monopolized by institutional investors and venture capital firms, making it nearly impossible for ordinary investors to participate. Traditional pre-IPO investments not only have extremely high entry barriers, but also limited liquidity, often requiring investors to wait years to exit.
The innovation of Ventuals lies in tokenizing the total valuation of these private companies, creating a valuation-based perpetual contract market. For example, if OpenAI is valued at $35 billion, then the price of one vOAI token is $35 (valuation divided by 1 billion). Investors can trade long or short on the valuation changes of star private companies like OpenAI, Stripe, and SpaceX with up to 10x leverage.
The significance of this model far exceeds the technological innovation itself. It creates synthetic liquidity for traditionally illiquid private company shares, making the price discovery process transparent and efficient. More importantly, it truly realizes the democratization of investment opportunities, allowing ordinary investors to participate in the value growth of these top companies.
For Hyperliquid, pre-IPO trading represents an important step for the platform to penetrate traditional finance. As blockchain technology begins to support the trading needs of traditional financial assets, this not only validates the maturity of the technology but also indicates greater market space and value potential.
06 Conclusion: Technological innovation redefines DeFi
The success of Hyperliquid proves a simple truth: projects that focus on solving real problems and serving genuine user needs can stand out in fierce competition, even without massive funding and marketing budgets. This decentralized exchange, built by a team of 11, took two years to leap from zero to a trillion, redefining the standards of DeFi trading platforms.
As Jeff Yan said, "We focus on building products that users love; everything else is secondary." Behind this seemingly simple idea lies a persistent pursuit of technological innovation and a deep understanding of user value. Hyperliquid chose not to compromise on existing blockchains but instead built a Layer 1 optimized for trading from scratch; it did not chase VC funding, but adhered to a user-first value distribution; it did not choose marketing-driven growth, but gained user recognition through the excellent experience of its product.
From an investment perspective, the HYPE token possesses all the characteristics of a high-quality investment target: strong fundamentals, an innovative business model, a solid technical moat, and healthy token economics. At the current price level of $42.5, considering the platform's growth rate and market potential, HYPE still has strong investment appeal.
