Hyperliquid has rapidly emerged as one of the most compelling narratives in the crypto space—distinct from the usual AI and meme-driven trends. With a bold approach that rejects venture capital, allocates 70% of its token supply directly to the community, and funnels 100% of platform revenue back to users, it's capturing attention across decentralized finance (DeFi). Its native token, $HYPE, now ranks among the top 25 cryptocurrencies by market cap—surpassing even UNI—thanks largely to a powerful buyback mechanism that reinvests protocol earnings.
This article explores Hyperliquid’s current product landscape, analyzes its innovative economic model, and evaluates whether $HYPE is overvalued or fairly priced in today’s market. We’ll examine key metrics, compare it with relevant peers like Binance and BNB, and assess long-term sustainability.
Note: This analysis reflects observations as of early 2025. The views expressed are subjective and intended for informational purposes only—not financial advice.
Hyperliquid’s Core Business Overview
Hyperliquid operates primarily as a high-performance decentralized exchange (DEX) with two core offerings: derivatives trading and spot trading. It also plans to launch HyperEVM, a full EVM-compatible execution layer, further expanding its ecosystem.
The platform runs on Hyperliquid L1, a custom-built Proof-of-Stake blockchain combining the HyperBFT consensus algorithm (a modified version of Meta’s LibraBFT) with a high-speed RustVM execution engine. This architecture enables on-chain order books capable of handling up to 2 million TPS, setting it apart from most DeFi protocols constrained by Ethereum’s limitations.
Let’s break down each component.
Derivatives Exchange: The Flagship Product
Launched in July 2023, Hyperliquid’s derivatives exchange is built around a Central Limit Order Book (CLOB)—the same model used by centralized giants like Binance and FTX. Unlike alternatives such as GMX or Synthetix that use pooled liquidity models, Hyperliquid prioritizes familiarity and performance for traders.
Key features:
- On-chain order matching and clearing
- Ultra-low latency execution (<100ms)
- No KYC required
- Competitive fee structure (as low as 0.02% maker / 0.05% taker)
👉 Discover how decentralized exchanges are redefining trading performance
What truly sets Hyperliquid apart is its Vault system, particularly the official HLP Vault (Hyperliquid Pool), which acts as a counterparty to user trades. Similar to GMX’s GLP but with key differences:
- HLP uses proprietary, non-transparent strategies
- Maintains a net short bias—profiting during bull markets by providing liquidity to long-biased retail traders
- Has generated over $50 million in PnL with ~$350 million TVL
As of late 2024, HLP held 95% of total vault deposits, underscoring trust in the team’s risk management. This dynamic creates a self-reinforcing cycle: more trading volume → higher fees → increased buybacks → stronger $HYPE fundamentals.
In terms of scale:
- Peak daily trading volume reached $10.4 billion
- Currently sustains ~$4–6 billion daily
- Accounts for over 60% of all DEX derivatives volume, far outpacing rivals like dYdX and Aevo
When compared to centralized exchanges:
- ~6% of Binance’s daily derivatives volume
- ~10% of Binance’s open interest
- Comparable to 15–20% of Bybit or Bitget’s activity at peak momentum
This positions Hyperliquid not just as a leader in DeFi derivatives—but as a credible challenger to tier-2 CEXs.
Spot Exchange & HIP-1: Decentralized Token Listings
Hyperliquid’s spot market follows the same CLOB model and fee structure as its derivatives arm. However, it only lists tokens compliant with HIP-1, Hyperliquid’s native token standard—similar in concept to ERC-20 but with a crucial twist.
What Is HIP-1?
HIP-1 introduces a decentralized listing mechanism via Dutch auctions:
- Anyone can bid to create a ticker (e.g., $GOD, $ANIME)
- Auction starts at double the previous winning price, drops linearly over 31 hours
- Minimum bid set at $10,000 USDC
- Winner gets exclusive right to deploy a token on Hyperliquid
Recent high-profile wins include:
- **$GOD**: Pantera-backed gaming project — sold for nearly $1M
- $ANIME: Rumored Azuki-affiliated token
- $SOLV: Bitcoin staking protocol backed by BN Labs
- $SWELL: Ethereum restaking protocol
This model effectively turns listing rights into an open market—eliminating opaque CEX-style listing processes while generating substantial revenue. Recent average listing fees exceed $100,000, rivaling those of mid-tier centralized exchanges.
All auction proceeds go directly into the Assistance Fund (AF), which uses them to buy back and hold $HYPE—creating direct value accrual for token holders.
Solving Liquidity: HIP-2 Automated Market Maker
New HIP-1 tokens face the classic DeFi problem: poor initial liquidity. To solve this, Hyperliquid launched HIP-2, an automated market maker (AMM) designed specifically for new tokens.
Key mechanics:
- Developers define price ranges and midpoint
- System auto-provides liquidity in 0.3% price increments ("grids")
- Fully integrated with the order book system
Over $25 million** in USDC is now deployed across HIP-2 pools. The spot exchange averages **$400 million daily volume, placing it among top decentralized spot DEXs—rivaling Curve and Orca.
HyperEVM: The Future of Composability
While current operations run on RustVM (optimized for trading), HyperEVM will unlock broader DeFi innovation.
Planned features:
- Full EVM compatibility
- Native gas token: $HYPE
- Interoperability with L1 components (e.g., shared oracles, cross-VM asset transfers)
- Open to all developers (unlike permissioned RustVM)
Crucially, HyperEVM is not a separate chain—it runs under the same HyperBFT consensus, ensuring security and seamless integration with the core exchange.
Think of it as analogous to Binance ↔ BNB Chain or Coinbase ↔ Base: a tightly coupled EVM layer extending utility beyond trading.
Testnet is live, with validators including Chorus One, Figment, and Nansen participating. No official mainnet launch date yet—but anticipation is building.
Once live, expect rapid deployment of lending protocols, yield vaults, NFT platforms, and more—fueling further demand for $HYPE as gas and staking collateral.
Team, Tokenomics, and Economic Engine
Lean but Visionary Team
Co-founded by Harvard alumni Jeff Yan and iliensinc, both with backgrounds in quantitative finance (Google, Hudson River Trading), the team remains lean—just 10 members as of late 2024, half of whom are engineers.
Despite small size, their technical execution—building a performant L1 from scratch, designing HIP-1 auctions, launching CLOB on-chain—is exceptional. Their focus on first-principles thinking reflects deep conviction in decentralized infrastructure.
$HYPE Tokenomics: Designed for Value Accrual
| Allocation | Percentage |
|---|---|
| Genesis Airdrop (Early Users) | 31.0% |
| Future Emissions & Rewards | 38.888% |
| Team | 23.8% (vested) |
| Hyper Foundation | 6.0% |
| Community Grants | 0.3% |
| HIP-2 | 0.012% |
Total supply: 1 billion $HYPE
No VC or private sale—70% of tokens go to community and future incentives.
All protocol revenues flow into two channels:
- HLP Vault – ~46%, rewards liquidity providers
- Assistance Fund (AF) – ~54%, buys back $HYPE
Additionally:
- HYPE-USDC trading fees paid in HYPE are permanently burned (~11k HYPE already destroyed)
- AF holds majority assets in $HYPE for stability
- Staking launched Dec 2024; current yield ~2.5%, based on PoS consensus similar to Ethereum
👉 See how leading protocols turn revenue into token value
Future upgrades may include:
- Redirecting EVM execution fees to stakers
- Offering fee discounts for staked $HYPE
- Expanding buyback sources post-HyperEVM launch
Is $HYPE Overvalued? Two Valuation Frameworks
Framework 1: Comparison with BNB (Binance)
Many analysts liken Hyperliquid to "on-chain Binance"—a fair analogy given overlapping business lines:
| Segment | Hyperliquid Equivalent | Binance Equivalent | Relative Value Estimate |
|---|---|---|---|
| Derivatives | HL Derivatives | Binance Futures | ~10% of BNB value |
| Spot Trading | HL Spot | Binance Spot | ~1.5% of BNB value |
| EVM Layer | HyperEVM (future) | BNB Chain | ~3% of BNB value (projected) |
Even at these conservative multiples, combined value approaches ~14.5% of BNB’s fully diluted valuation.
But here’s where Hyperliquid shines: economic model superiority.
- Binance historically used ~20% of profits for BNB buybacks
- Hyperliquid returns 54% of net revenue directly to $HYPE via buybacks—and could increase this as HLP profitability improves
Moreover, operating costs are drastically lower:
- No KYC teams, compliance overhead, or manual listing negotiations
- HIP-1 auctions are code-governed → near-zero marginal cost
- On-chain transparency reduces fraud risk and internal controls burden
Given these efficiencies—and assuming similar net margins—Hyperliquid should command a premium multiple over traditional CEXs.
Framework 2: Price-to-Sales (P/S) Ratio
Using trailing monthly data:
| Revenue Stream | Annualized Revenue to $HYPE |
|---|---|
| Derivatives Fees (54%) | $225.5M |
| HIP-1 Auctions | $39.5M |
| Spot Fees (USDC portion) | $16.8M |
| HYPE Burn (from fees) | ~$37M |
| Total Value Accrual | ~$319M/year |
At current prices:
- Circulating P/S: ~29.4x
- Fully Diluted P/S: ~88x
Compare this to major L1s:
- Solana: ~50–70x FDV/S
- Arbitrum: ~40–60x
- Ethereum: N/A (but services layer drives value)
Despite being earlier-stage, Hyperliquid trades at a discount relative to peers—especially considering its real revenue, growing user base, and clear path to expanded utility via HyperEVM.
👉 Compare top crypto projects using fundamental metrics
Frequently Asked Questions (FAQ)
Q: Does Hyperliquid require KYC?
A: No. One of its key advantages is permissionless access—anyone can trade without identity verification.
Q: Where does protocol revenue go?
A: 46% supports HLP liquidity providers; 54% funds $HYPE buybacks via the Assistance Fund. Additional burns occur from HYPE-denominated fees.
Q: Can I stake $HYPE? What’s the return?
A: Yes. Staking launched in December 2024 with an estimated yield of ~2.5%, sourced from PoS consensus rewards—not protocol fees (yet).
Q: How does HIP-1 prevent spam listings?
A: High minimum bid ($10K+) and Dutch auction format create economic barriers, ensuring only serious projects participate.
Q: What happens when HyperEVM launches?
A: Expect increased demand for $HYPE as gas fees, expanded DeFi composability, and potential redistribution of fees to stakers.
Q: Is the code open source?
A: Currently not fully open-sourced—a risk factor noted by auditors—but transparency comes via on-chain data availability.
Final Thoughts: Fairly Valued With Upside Potential
While Hyperliquid’s metrics have fluctuated dramatically—tripling in volume and retracting by 50% within weeks—the underlying fundamentals remain strong.
At current levels:
- $HYPE is not cheap—but not obviously overvalued either
- Its P/S ratio lags behind comparable L1s despite superior revenue efficiency
- The economic flywheel—volume → fees → buybacks → price → more users—is functional and accelerating
With HyperEVM on the horizon, the next phase could unlock exponential growth in TVL, developer activity, and token utility.
For investors seeking exposure to a high-performance, community-aligned exchange protocol with real cash flows and innovative design, Hyperliquid represents one of the most compelling opportunities in DeFi today.