What is Hyperliquid (HYPE) and How Does it Work: The Complete Hyperliquid Review

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Hyperliquid has rapidly emerged as one of the most innovative decentralized exchanges (DEXs) in the cryptocurrency space. By combining the speed and functionality of centralized platforms with the transparency and control of decentralized finance (DeFi), Hyperliquid offers traders a powerful, low-latency environment for perpetual futures trading. Built on its own high-performance blockchain, it supports advanced features like scale orders, decentralized orderbooks, and cross-chain bridging — all while maintaining a user-friendly interface familiar to both novice and experienced traders.

In this comprehensive 2025 review, we’ll explore how Hyperliquid works, its unique technical architecture, tokenomics, security considerations, and what sets it apart from competitors like GMX, dYdX, and Jupiter Perps.

What is Hyperliquid?

Hyperliquid is a decentralized exchange that operates on its own dedicated Layer-1 blockchain. Unlike most DEXs that rely on existing networks such as Ethereum or Arbitrum, Hyperliquid runs natively on a custom-built infrastructure designed specifically for high-frequency trading and DeFi innovation.

The platform specializes in crypto-based perpetual futures contracts — leveraged instruments that allow users to speculate on price movements without owning the underlying assets. With support for up to 50x leverage and deep liquidity across dozens of cryptocurrencies, Hyperliquid delivers a trading experience comparable to centralized exchanges (CEXs), but with full user custody and on-chain settlement.

One of its standout traits is the seamless blend of CeFi-like usability with core DeFi principles: non-custodial wallets, open access, and community-driven governance via the HYPE token.

👉 Discover how Hyperliquid combines speed, security, and decentralization in one powerful platform.

How to Bridge to Hyperliquid

To begin trading on Hyperliquid, you must first bridge assets — primarily USDC — from another blockchain. The most common method involves transferring funds via Arbitrum, which currently serves as the primary entry point to the network.

You’ll need a self-custody wallet like MetaMask. Once set up:

  1. Bridge USDC to Arbitrum: Use a centralized exchange or a decentralized bridge (e.g., Arbitrum Bridge, Synapse) to send USDC from Ethereum or another chain to your Arbitrum-connected wallet.
  2. Connect to Hyperliquid: Visit the official Hyperliquid app and connect your wallet.
  3. Start Trading: Your USDC will appear in your Perps account by default, ready for leveraged trading.

This streamlined process ensures fast onboarding without sacrificing control over your funds.

Key Features of Hyperliquid in 2025

Hyperliquid’s rapid growth — with open interest exceeding $9.3 billion in May 2025 — can be attributed to its relentless focus on innovation and user experience.

Advanced Order Types

Hyperliquid was the first DEX to introduce scale orders, a feature borrowed from traditional finance that allows traders to split large positions into multiple smaller limit orders at incremental price levels. This enhances execution precision and reduces market impact.

Additionally, it supports:

Trading Multiple Asset Classes

The platform enables trading across a diverse range of digital assets:

All pairs are quoted against USDC, ensuring consistent pricing and reduced slippage.

Spot and Perps Integration

While primarily focused on perpetuals, Hyperliquid also offers spot trading for select tokens like HYPE/USDC and various community-driven memecoins. However, note that deposited funds default to the Perps account — transfers between accounts are required for spot trading or withdrawals.

Technical Architecture: HyperEVM and HyperBFT

At the heart of Hyperliquid’s performance lies its dual-layered technical foundation: HyperEVM and HyperBFT.

HyperEVM: Full Ethereum Compatibility

Launched in February 2025, HyperEVM brings full EVM compatibility directly into Hyperliquid’s Layer-1. This means developers can deploy Solidity-based smart contracts seamlessly while benefiting from native integration with on-chain orderbooks and trading data.

Key advantages:

This architecture allows DeFi builders to create advanced financial tools — from automated vaults to structured products — within a high-throughput environment.

HyperBFT: High-Speed Consensus

Powered by a custom Byzantine Fault Tolerant (BFT) consensus algorithm inspired by HotStuff, HyperBFT delivers exceptional performance:

With built-in tolerance for up to one-third malicious validators, the network remains secure even under adversarial conditions. Crucially, both the L1 and HyperEVM share the same state layer, ensuring data consistency across environments.

👉 See how Hyperliquid’s blockchain achieves unmatched speed and reliability for DeFi trading.

The HYPE Token: Governance and Incentives

HYPE is the native utility and governance token of the Hyperliquid ecosystem. It plays a central role in platform operations, incentivizing participation and aligning long-term interests.

Token Allocation

The distribution emphasizes fairness and community empowerment:

Notably, there were no private investors or venture capital allocations — reinforcing its decentralized ethos.

Airdrop Impact

The November 29, 2024 airdrop distributed HYPE to approximately 94,000 eligible users, with an average value of $45K–$50K per recipient. This generous allocation helped establish strong early adoption and trust.

Despite initial skepticism common after large airdrops, HYPE defied expectations by surging from $4 to $35 post-launch — signaling strong market confidence.

Security Considerations

No platform is immune to risk, and Hyperliquid faced scrutiny in late 2024 when security researcher Tay Monahan flagged suspicious wallet activity linked to North Korean hackers. Although no exploit occurred and all user funds remained safe, the incident triggered over $500 million in net outflows within days.

Hyperliquid Labs responded swiftly:

“There has been no DPRK exploit—or any exploit for that matter—of Hyperliquid. All user funds are accounted for.”

Since then, the protocol has maintained a clean security record. Its reliance on a permissionless staking mechanism for asset delistings and robust bug bounty programs further strengthens trust.

What Makes Hyperliquid Unique?

Several factors differentiate Hyperliquid from other DEXs:

Low Slippage via Decentralized Orderbooks

Unlike AMM-based platforms prone to high slippage during volatility, Hyperliquid uses a centralized-style orderbook model that operates fully on-chain. This results in tighter spreads and more accurate price discovery — essential for active traders.

Cross-Chain Bridging Flexibility

Users can transfer assets from multiple chains using:

This cross-chain accessibility broadens capital inflow sources and enhances liquidity depth.

Founders and Team Background

Co-founded by Jeff Yan, formerly of Hudson River Trading and Chameleon Trading, Hyperliquid benefits from deep expertise in algorithmic market-making and high-frequency trading. Much of the team consists of engineers from top institutions like MIT and Harvard, though many contributors remain pseudonymous — consistent with broader DeFi norms.

Other key figures include Iliensinc (co-founder) and Xulian HL (@KingJulianIAm), recognized as core contributors.

Main Competitors in the Perpetuals Space

While innovative, Hyperliquid competes with established players:

GMX

Offers perpetuals with up to 50x leverage; known for low fees (down to 0.05% in V2). Operates across Avalanche and Arbitrum.

dYdX

A pioneer in DeFi derivatives with over $1 trillion in lifetime volume. Now on its own chain with up to 20x leverage.

Jupiter Perps

Solana-based DEX offering up to 100x leverage and high APYs for liquidity providers.

Despite stiff competition, Hyperliquid stands out through superior speed, richer feature sets, and deeper integration between trading and development layers.

👉 Compare top DeFi platforms and see why traders are choosing next-gen solutions like Hyperliquid.

Frequently Asked Questions (FAQ)

What is Hyperliquid and how does it work?

Hyperliquid is a decentralized exchange running on its own Layer-1 blockchain. It enables users to trade perpetual futures contracts with up to 50x leverage using a non-custodial wallet. Orders are settled on a decentralized orderbook with minimal slippage, combining DeFi security with CeFi-like performance.

What makes Hyperliquid different from other DEXs?

It runs on a purpose-built blockchain with native EVM support (HyperEVM) and ultra-fast consensus (HyperBFT). Features like scale orders, Hyperps, copy-trading vaults, and cross-chain bridging give it an edge in functionality and speed over traditional DEXs.

Is Hyperliquid safe?

Yes. While concerns were raised about DPRK-linked wallets testing the system in 2024, no breach occurred. User funds remained secure throughout. The platform uses industry-standard security practices including bug bounties and transparent validator operations.

Can I stake HYPE tokens?

Yes. HYPE can be staked to earn rewards and participate in governance. Staking also contributes to network security and allows holders to vote on protocol upgrades.

Does Hyperliquid support spot trading?

Yes, but it's secondary to perpetuals. Spot trading is available for select pairs like HYPE/USDC and various memecoins. Funds must be transferred manually between Perps and Spot accounts.

How does copy trading work on Hyperliquid?

Users can create public trading vaults starting at $100. Others can allocate funds to follow these strategies and share in profits (or losses). All trade history is visible on-chain, promoting transparency.

Final Thoughts

Hyperliquid represents a bold evolution in decentralized trading. By building its own high-speed blockchain and integrating familiar CeFi features into a DeFi framework, it offers traders unprecedented performance without compromising ownership or transparency.

With strong fundamentals, community-first tokenomics, and continuous innovation — including scale orders, Hyperps, and developer-friendly tooling — Hyperliquid is well-positioned to lead the next generation of decentralized exchanges.

As the line between CeFi and DeFi continues to blur, platforms like Hyperliquid demonstrate that speed, security, and decentralization don’t have to be mutually exclusive.

Core Keywords: Hyperliquid, HYPE token, decentralized exchange, perpetual futures, DeFi trading, HyperEVM, HyperBFT, scale orders