Summary: Understand Hyperliquid's unique value and growth potential in one article.
Author: Biteye Core Contributor Louis Wang
While most DeFi projects are still celebrating breaking 10,000 daily active users, Hyperliquid has quietly processed over $1 billion in daily trading volume. This 10-person team, led by Harvard Physics Olympiad gold medalist Jeff Yan, has proven a simple truth by rejecting VC funding: true innovation does not require capital backing; it requires 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, accounting for over 70% of DEX perpetual contract market share; user scale grew from 350,000 in 2024 to over 600,000 active wallets in 2025; BTC perpetual contract trading volume has reached 10% of Binance. Behind these remarkable numbers is a story about how technological innovation redefines decentralized finance.
1. Explosive Growth of Market Data
1.1 Astonishing Growth in Trading Volume
Hyperliquid grew from zero to over 600,000 users in just two years, 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 watched the changes'. However, the result was explosive: in just 100 days, the daily trading volume surpassed $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, a 47% increase from June's $216 billion. This trading volume brought Hyperliquid's share to 11.89% compared to Binance, setting a new record, while Binance's perpetual contract trading volume during the same period was about $2.59 trillion. The latest data shows that the cumulative trading volume has exceeded $2.3T, with open interest reaching $15.2B.
HL's Trading Volume and OI, https://stats.hyperliquid.xyz/
Currently, HyperLiquid's share of the decentralized perpetual contract market trading volume has exceeded 70%, 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 leading CEX,' Hyperliquid has begun to directly challenge traditional centralized exchanges on certain metrics.
2. Why is Hyperliquid able to capture market share?
2.1 A KYC-free Trading Experience
Unlike traditional centralized exchanges, Hyperliquid offers a truly permissionless trading experience. Users only need to connect their wallets to start trading, without a cumbersome identity verification process. This freedom attracts a large number of traders who value privacy and convenience, particularly those who are unwilling or unable to complete KYC.
2.2 Greater Position Flexibility
Traditional CEXs often impose heavy restrictions on large trades and high-leverage operations, while Hyperliquid's decentralized nature allows users to open larger positions. The platform supports leverage of up to 50 times and has more lenient restrictions on trade sizes, which is 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 particularly valuable in the wake of the FTX scandal, providing a foundation of trust for users.
2.4 Revolutionary Breakthrough in Technical Performance
Hyperliquid addresses the fundamental performance issues of DeFi trading through its self-built Layer 1 blockchain:
Transaction Speed: Sub-second confirmations, comparable to top CEXs
Throughput: 200,000 TPS, far exceeding other DEXs' 2,000 TPS
Gas Fees: Completely free for users
Order Book: Fully on-chain, real-time matching
Jeff Yan identified the problems with traditional blockchains: '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 for trading from scratch.
3. Innovative Vault Mechanism: A Double-edged Liquidity Solution
3.1 How the HLP Vault Works
Hyperliquid's HLP (Hyperliquid Liquidity Provider) machine 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:
Provides stable liquidity support for the platform
Allows ordinary users to participate in professional market-making strategies
Transparent earnings, fully traceable on-chain
Effectively reduces trading slippage
As shown in the figure, a single transaction of $100,000 in BTC or ETH on HL can achieve 0 slippage.
Slippage for different transaction amounts https://stats.hyperliquid.xyz/
3.2 Risk Exposure of Counterparty Mechanisms
However, the Vault mechanism also brought systemic risks, which were fully exposed during the JELLY incident in March 2025.
Review of the JELLY Attack Incident:
On March 26, 2025, attackers controlled 124.6 million JELLY tokens, first selling a large amount to push the price down, causing HLP to passively take on a $15.3 million short position, and then buying large amounts on decentralized exchanges to push the price up, resulting in a 400% surge in JELLY price within an hour, with unrealized losses for HLP reaching $13.5 million at one point.
At that time, HyperLiquid was caught in an unprecedented public relations crisis, and the price of HYPE tokens fell to an all-time low (which in hindsight was the best buying opportunity). However, HyperLiquid responded quickly to the crisis: validators reached consensus within two minutes, urgently taking down the JELLY market; all positions were forcibly liquidated at the attacker's opening price; and the Hyper Foundation promised to compensate all normal users.
The HLP system mechanism was also quickly improved after this crisis:
ADL Mechanism Optimization: No longer based on overall asset calculations, but individually monitoring liquidation pool losses
Position Limits Strengthened: Re-evaluating risk parameters for low market cap tokens
Liquidation Mechanism Strengthened: Reducing liquidation pool proportion to minimize risk exposure
HLP TVL, https://defillama.com/protocol/hyperliquid?tvl=true&events=false
Recovery data after the incident shows: TVL 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 per day to a stable $140 million per day, demonstrating the platform's strong resilience.
4. Revolutionary Value Capture: Redefining Token Economics
4.1 Unprecedented Buyback Commitment
While most DeFi projects are still debating 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 about 76,000 HYPE tokens daily, with an annualized buyback rate reaching 4.7% of circulating supply. The cumulative buyback value has exceeded $900 million, while 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 true dividend model that returns protocol revenue directly to token holders.
4.2 Multi-dimensional Value Realization
The value capture of HYPE tokens is not limited to buybacks and destruction; as a Layer 1, it also has node staking rewards. The yield design refers to Ethereum's PoS consensus mechanism, with the yield inversely proportional to the square of the staked HYPE amount, currently around 2.2%. On-chain data shows that over 32 million HYPE tokens are already participating in staking, accounting for about 42% of the circulating supply, with 23% being liquid staking (like kHYPE).
HYPE Node Staking Yield, https://app.hyperliquid.xyz/staking
4.3 The Brave Experiment of Rejecting VC
In an industry dominated by venture capital, Hyperliquid chose a radically different path. The project allocated 70% of its 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 aspect of this distribution model is that it completely avoids the VC sell-off pressure typical of traditional projects. In the traditional model, VCs often sell a large number of tokens for profit after the token goes live, while Hyperliquid's model ensures token price stability, making true users and builders the biggest beneficiaries. As Jeff Yan stated, allowing venture capitalists to hold large stakes in a decentralized network would become 'the scar of the network.'
5. HYPE Tokens: An Undervalued Value Trap
5.1 Investment Logic Supported by Strong Fundamentals
From a purely investment perspective, HYPE tokens possess all the elements of a successful investment target. First, strong business fundamentals: the platform's annual revenue has reached $577 million, and this figure comes solely 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 highest in the industry.
More importantly, this growth is built on a foundation of real product value rather than speculative hype. Hyperliquid's market share continues to expand, and it has begun to challenge traditional centralized exchanges directly on certain metrics, providing immense space for future growth.
From the beginning of the year to now, HYPE has increased by about 83%, significantly outperforming Bitcoin and Ethereum. The high correlation of 0.703 with Bitcoin indicates that HYPE enjoys additional returns driven by its fundamentals while benefiting from the overall rise of the crypto market.
5.2 Long-term Value Built by Technical Moats
The investment value of HYPE tokens comes not only from short-term business growth but more importantly from the technical moat built by Hyperliquid. The self-developed Layer 1 blockchain, processing capacity of 200,000 TPS, and sub-second transaction confirmations are advantages that other projects cannot replicate in the short term.
In a DeFi market full of homogenous competition, Hyperliquid has established a genuine differentiated advantage through technological innovation. The value of this moat will continue to amplify over time, providing solid support for the long-term value of HYPE tokens.
5.3 HIP-3: Building a New Foundation 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 lengthy regulatory approvals, 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 created an entirely new value capture mechanism. The creation of each new market requires a large amount of HYPE tokens to be staked, creating a persistent rigid demand for the token. At the same time, market creators can earn a portion of the transaction fees from the markets they create, forming a profit-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 yields, 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 areas of traditional finance—pre-IPO trading.
Pre-IPO trading refers to the activity of trading shares or related derivatives of a company before it officially goes public. This asset class, worth trillions of dollars, has long been monopolized by institutional investors and venture capital firms, with ordinary investors almost entirely unable to participate. Traditional pre-IPO investments not only have extremely high barriers to entry but also limited liquidity, often requiring investors to wait years to exit.
Ventuals' innovation lies in tokenizing the total valuation of these private companies, creating a valuation-based perpetual contract market. For instance, if OpenAI's valuation is $35 billion, the price of one vOAI token would be $35 (valuation divided by one billion). Investors can trade on the valuation changes of star private companies like OpenAI, Stripe, and SpaceX with up to 10x leverage.
The significance of this model goes far beyond mere technological innovation. It creates synthetic liquidity for traditionally illiquid private company shares, making the price discovery process transparent and efficient. More importantly, it truly democratizes 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 the traditional finance sector. When blockchain technology begins to carry the trading demand of traditional financial assets, it not only validates the maturity of technology but also indicates a larger market space and value potential.
6. Conclusion: Technological Innovation Redefines DeFi
Hyperliquid's success proves a simple truth: projects that focus on solving real problems and serving real user needs can stand out in fierce competition, even without massive funding and marketing budgets. This decentralized exchange, built by an 11-person team, has completed a leap from zero to trillion in two years, redefining the standards for DeFi trading platforms.
As Jeff Yan said: 'We focus on building products that users love; everything else is secondary.' Behind this seemingly simple philosophy is a relentless pursuit of technological innovation and a deep understanding of user value. Hyperliquid chose not to compromise on existing blockchains but to build a Layer 1 optimized for trading from scratch; it did not choose to chase VC funds but insisted on user-prioritized value distribution; it did not choose marketing-driven growth but relied on the superior experience of the product itself to gain user recognition.
From an investment perspective, HYPE tokens possess all the characteristics of a high-quality investment target: strong fundamentals, innovative business model, robust 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.
