Hyperliquid is a next-generation decentralized exchange (DEX) that combines the speed and experience of centralized trading with on-chain transparency. First launched in 2023 by Hyperliquid Labs (founded by Jeff Yan and Iliensinc), it runs on a custom Layer-1 blockchain purpose-built for high-performance trading.
Technical Architecture of Hyperliquid
Hyperliquid operates on its own Layer-1 blockchain – often called the Hyperliquid L1 – designed from scratch for speed and scalability. It uses a proprietary HyperBFT consensus mechanism, inspired by the HotStuff BFT protocol, enabling sub-second block times and one-block finality.
HyperBFT is a proof-of-stake mechanism, Byzantine Fault Tolerant consensus optimized for high throughput and low latency. This architecture delivers up to 100,000–200,000 transactions/orders per second throughput, far beyond typical blockchain capacity. In practice, that means near-instant trade execution even under heavy load, giving traders a CEX-like responsiveness on-chain experience.
Source: OAK Research & GL Capital
Hyperliquid’s execution layer is split into two main components: HyperCore and HyperEVM.
HyperCore
HyperCore is the specialized engine that handles the order-book, trade matching, perpetual futures logic, and spot exchange – all implemented at the protocol level for maximum efficiency.
Every order placement, cancellation, trade, funding payment, liquidation, etc, occurs on-chain within a single block, leveraging HyperBFT’s one-block finality. This eliminates centralized reliance on off-chain match engines and ensures full transparency.
HyperEVM
HyperEVM, launched on mainnet in February 2025, is an EVM-compatible smart contract layer integrated into Layer 1 blockchain. It allows developers to deploy general-purpose dApps and smart contracts while still inheriting the same high performance environment.
HyperEVM brings Ethereum-like programmability to Hyperliquid, so new DeFi dApps can compose with HyperCore’s native orderbook and liquidity primitives. Notably, HYPE is used as the native gas token for HyperEVM transactions, although trading on HyperCore itself is gas-free.
Hyperliquid Scalability Approach
Rather than build on an existing chain, the Hyperliquid team (with roots in a high-frequency trading firm) chose a custom “app-chain” approach for ultimate performance. They initially leveraged Tendermint consensus mechanism but transitioned to the bespoke HyperBFT to support surging volumes.
HyperBFT uses pipelined, continuous block processing (no waiting for block execution to finish) and an asynchronous BFT design similar to Aptos/Sui’s, enabling <1 second latency and massive throughput scaling. To ensure scalability and connectivity between chains, Hyperliquid employs a unique hybrid architecture: the L1 runs its own validator set (currently ~16 validators) and posts state proofs to Arbitrum. This effectively makes Hyperliquid a “Layer-1.5” or L3 – it enjoys the scaling advantage of a standalone chain while tapping into Ethereum’s user base and liquidity via a native Arbitrum bridge.
For example, users can onboard capital easily by depositing USDC stablecoin from Arbitrum straight into Hyperliquid without complex manual bridging. Because most trading collateral is Arbitrum-based USDC, Hyperliquid’s state is partially anchored to Arbitrum; if Arbitrum rolled back a USDC transfer, Hyperliquid would mirror that – hence the “L3” characterization.
In short, Hyperliquid’s technical architecture prioritizes speed and throughput through custom L1 design, while its built-in Ethereum connectivity addresses liquidity and onboarding – a two-pronged scalability strategy that sets it apart.
Hyperliquid Core Features and On-Chain Order Book Exchange
Fully On-Chain Order Book
Hyperliquid’s flagship product is its on-chain central limit order book (CLOB) for trading. Unlike typical DEXs that use Automated Market Makers (AMMs), Hyperliquid records every order and trade on its blockchain order book, just like a centralized exchange’s order matching engine.
Source: Messari
This design yields several benefits:
(1) Low slippage and precise pricing – trading orders execute at user-defined prices rather than an AMM curve, so large trades can clear with minimal price impact.
(2) Advanced trading features – the platform supports features normally found only on CEXs, including market and limit orders, stop-loss and take-profit orders, and cross-margin accounts with up to 40-50× leverage. Traders can deploy complex strategies and high-frequency trades on-chain without the simplifications of AMMs.
(3) Transparency – every order, fill, funding rate, and liquidation process is immutable on-chain, providing verifiable fairness that even centralized exchanges can’t match. An added bonus of avoiding AMMs is that Hyperliquid eliminates the toxic arbitrage opportunities that plague AMM-based DEXs (no constant rebalancing means no losses to arbitrageurs).
Perpetual Futures Exchange
Hyperliquid is well known for a decentralized perpetual futures trading platform. It launched as a perpetual DEX in 2023, offering traders the ability to long or short crypto assets with significant leverage.
Today it supports 130+ perpetual markets (from major assets like BTC/ETH to altcoins and even meme tokens) with leverage up to 50× on certain pairs. All perpetual contracts are settled in USDC, and traders benefit from real-time on-chain funding rates and swift liquidations thanks to sub-second finality.
Source: DefiLlama
Hyperliquid’s performance rivals top centralized futures exchanges – for instance, on peak days it has processed $18 billion+ in trading volume, more than 10× its closest on-chain competitors.
As of early 2025, Hyperliquid commanded roughly 70% of the entire decentralized perps market volume, far outpacing the next player (~9% share). This dominance is driven by its deep liquidity and speed; slippage on big trades for top assets is often near 0%–0.01%, which “rivals centralized exchanges” in execution quality. Traders have flocked to Hyperliquid for a CEX-like experience without relinquishing self-custody.
Source: OAK Research & GL Capital
Liquidity Mechanisms – Vaults and Market Making
To achieve such depth, Hyperliquid introduced an innovative vault system for liquidity. The Hyperliquidity Provider (HLP) vault is a protocol-managed liquidity pool that actively makes markets and backstops trades. When a trader’s order cannot find an immediate match, the HLP vault can take the opposite side of the trade, ensuring there’s always a counterparty and reducing spreads. The HLP also automatically participates in liquidations, helping to absorb large positions that get liquidated without crashing the market.
Source: DefiLlama
Uniquely, the HLP doesn’t just sit idle – it runs dynamic market-making and arbitrage strategies to manage risk and even profit from trading activity. All trading fees on Hyperliquid, including maker/taker fees, funding payments, and liquidation penalties, flow into the HLP and are redistributed to liquidity providers, rather than being taken as profit by the team.
In essence, users who deposit USDC into the HLP vault earn a share of the platform’s revenue and PnL, similar to GMX’s GLP model – but here the vault’s strategies are active rather than passive. HLP depositors have seen attractive yields (reportedly up to ~17% APY) as the vault accumulates trading revenues.
Spot Trading and Asset Listings
After gaining traction with perps, Hyperliquid launched its spot trading platform in April 2024. Like the perpetuals market, the spot exchange runs entirely on an on-chain order book, ensuring full transparency and fast execution.
Hyperliquid takes a novel approach to token listings. Only assets that follow the HIP-1 standard (Hyperliquid Improvement Proposal 1) are eligible. These tokens are either natively issued on Hyperliquid or wrapped using its custom standard.
To list a new token, projects must go through a permissionless auction process defined by HIP-2. Developers and communities submit bids for listing rights. Winning bids secure a spot on the exchange, with initial liquidity automatically provided through built-in mechanisms.
This structure allows even meme coins to launch in an orderly, trustless manner. Although limited to native assets for now, the HIP-1 standard sets the foundation for future cross-chain listings. In time, Hyperliquid may support bridged tokens from other ecosystems.
— ASXN (@asxn_r) February 22, 2025
Already, the spot exchange has gained traction – by early 2025 it was handling ~$200–300M in daily spot volume, slightly ahead of dYdX’s nascent spot markets. It even ranked among the top 10 DEXes by volume at one point. The combination of a thriving perps market and growing spot market on one chain creates synergies in liquidity and user experience.
HYPE Tokenomics: Supply, Emissions, Utility, and Performance
Hyperliquid’s native token HYPE (sometimes called HYPER) lies at the heart of its ecosystem, serving as both a governance token and an economic incentive mechanism.
HYPE was introduced via a historic airdrop on November 29, 2024 – an event that distributed 310 million tokens (31% of the total supply) directly to over approximately 90,000 early users. Valued around $1.2 billion at launch, this was one of the largest and most generous DeFi airdrops ever, with an average recipient allocation equivalent to ~$45k–50k.
The average $HYPE airdrop is now worth $109,568. https://t.co/YGcl27Nko0
— Riley 🏴☠️ (@interchainriley) June 26, 2025
Importantly, Hyperliquid completely eschewed venture capital funding, meaning no HYPE tokens were set aside for VCs or private investors. The project was bootstrapped by its founders, so the token distribution was uniquely community-centric from day one.
Instead of the typical VC allocations, the initial token distribution looked like this:
- 31% to the community via genesis airdrop
- 38.8% reserved for future community incentives/emissions
- 23.7% to core contributors (team) with a 1-year lockup
- 6% to the Hyper Foundation for operational costs
This adds up to a fixed maximum supply of ~1 billion HYPE (specifically 999,999,999). There is no ongoing mining or PoW inflation – any “emissions” will come from that pre-allocated 38.8% pool intended for community rewards over time.
HYPE is fundamentally a utility and governance token for the Hyperliquid ecosystem. Its key uses include: governance voting, staking, fee discounts, and gas currency. HYPE holders can vote on protocol proposals and parameter changes, giving the community a voice in Hyperliquid’s evolution.
In fact, Hyperliquid Improvement Proposals (HIPs) are the governance mechanism by which features like new asset listings are decided. For instance, HIP-3 introduced a process for the community to launch new perpetual markets permissionlessly. By holding and staking HYPE, users can influence such decisions, truly decentralizing the exchange’s future.
Introducing Staking Tiers
Staking tiers will be determined by the amount of HYPE staked. The initial benefit of staking tiers is reduced trading fees. These updates are expected to go live on or after April 30 to give users time to adjust.
As part of this update, the…
— Hyperliquid (@HyperliquidX) March 19, 2025
Staking HYPE plays a vital role in securing the network. Validators must stake HYPE to produce blocks under the HyperBFT consensus. Regular holders can delegate their tokens to these validators, helping maintain consensus while earning staking rewards in return.
Stakers also receive trading benefits. Hyperliquid offers tiered fee discounts—up to 40%—for users who stake large amounts of HYPE. This system encourages active traders to hold and lock up their tokens, aligning long-term incentives between users and the protocol.
Beyond staking, HYPE serves as the gas token for HyperEVM. While trades on HyperCore remain gasless, users need HYPE to pay fees when interacting with smart contracts on HyperEVM. As on-chain activity grows, this use case helps sustain token demand.
HYPE is also actively traded. It’s listed on both the spot and perpetual markets on Hyperliquid (HYPE/USDC), where users can speculate or use it as collateral. By December 2024, the exchange even enabled 3× leveraged trading for HYPE perps—further proof of strong user demand.
HYPE Price Market Performance
Since launching in late 2024, HYPE has delivered one of the most impressive price performances in DeFi. The token debuted at around $3.90 in November 2024 and climbed steadily. By June 28, 2025, it traded at approximately $36.12—an increase of over 1,000% in just seven months. At its peak in June, HYPE reached an all-time high of $45.59 amid surging demand.
At a $36 price, the circulating market cap stood at roughly $12 billion, while the fully diluted valuation (FDV) reached around $36 billion. That figure exceeded the combined market caps of all its major DEX competitors, reflecting the market’s strong confidence in Hyperliquid’s long-term potential.
Despite distributing 31% of supply via a massive airdrop, HYPE avoided the common fate of post-airdrop dumps. Instead, the token’s price rallied. Early users showed strong conviction, and a new wave of buyers entered the market. This demand pushed the price up further, supported by organic accumulation.
Notably, some whales purchased nearly $10 million worth of HYPE shortly after launch, reinforcing market confidence. Rather than cashing out, many airdrop recipients held or reinvested, contributing to the token’s sustained upward momentum.
For more: Hyperliquid Price Prediction: Potential HYPE Price Movement
Source: Coingecko
By mid-2025, HYPE ranked among the top-performing DeFi tokens. Its momentum came from strong usage metrics—Hyperliquid consistently posted record trading volumes, fee revenue, and total value locked (TVL). Open interest surpassed $10.1 billion, and daily fees reached $5.6 million. These figures contributed real value to both the ecosystem and HYPE holders.
Only one-third of the token supply is in circulation. Combined with a community-first approach and no VC allocation, this structure has fueled investor confidence. Many believe HYPE could gain more value if Hyperliquid continues to grow. However, analysts also caution that HYPE’s high fully diluted valuation (FDV) requires sustained trading activity and broader ecosystem expansion. Upcoming token unlocks and changing market conditions could introduce volatility.
