Hyperliquid has quickly become one of the most popular decentralized cryptocurrency exchanges. The seamless interface coupled with the offering of familiar trading features and the underlying benefits of decentralization have made it a preferred choice for many traders.
In the following guide, we take a look at what makes Hyperliquid different compared to existing solutions, its structure, tokenomics, and more.
What is Hyperliquid? Exploring Hyperliquids Features Hyperliquid: Technicals HyperEVM: Full Ethereum Compatibility HyperBFT: Hyperliquids Consensus Algorithm The HYPE Tokenomics HYPE Token Allocation Hyperliquid Airdrop How Safe is Hyperliquid? What Makes Hyperliquid Unique? Low Slippage with Decentralized Orderbooks Cross-Chain Bridging Capabilities Founders of Hyperliquid Hyperliquid Main Competitors GMX dYdX Jupiter Perps Frequently Asked Questions What is Hyperliquid and how does it work? What makes Hyperliquid different from other decentralized exchanges? Is Hyperliquid safe? Final Thoughts
Hyperliquid is a decentralized exchange (DEX) that, unlike most of its competitors, runs on its own blockchain. The platform offers crypto-based perpetual futures contracts that can be traded without owning the underlying assets, similar to how centralized exchanges (CEXs) work.
One of Hyperliquid’s main appeals is its high-speed, simple yet feature-rich platform for high-level trading while offering low latency, reliability, and a smoother user experience. That said, Hyperliquid finds a good balance between centralized finance (CeFi) and decentralized finance (DeFi) elements.
The platform supports a lot of different cryptocurrencies such as BTC, ETH, AVAX, SOL, SUI, you name it. It supports so many cryptocurrencies that even data aggregators have dedicated pages to keep track of its ecosystem (which spans a market capitalization of around $8 billion, mostly due to the HYPE token).
But its not just the amount of supported coins or the user-friendly UI. The project offers traders so many features and trading options that the cumulative value of its perpetuals volume has reached over $600B in less than two years, as shown below:
Source: DeFiLlama
The rise in Hyperliquid’s total value locked and ecosystem growth is more than just hype. It could be attributed to the protocol’s team constantly developing and deploying new features, rolling out new, exotic trading instruments that not many other DEXs cared about at the time.
One of the most interesting features of Hyperliquid is the ability to capitalize on forming narratives and events. For instance, you can trade index or pre-launch tokens, most popularly, memecoins. Hyperliquid is actually one of the first perp DEXs to allow memecoin trading on its platform.
It is also the first DEX to introduce scale orders, a popular type of order in traditional markets. It allows users to split a large order into smaller ones. Its a conglomerate of limit orders that incrementally increase or decrease in price depending on whether its a buy or sell action.
Besides scale orders, Hyperliquid offers most things you would see on a CEX; that is market and limit orders, take profits, stop loss, cross-margin, and leverage up to 50x (depending on the asset). It also has Hyperps, which are Hyperliquid-only perpetuals that work similarly to regular perps, the difference being that they dont require a spot or index oracle price data.
Source: Hyperliquid Yes, most of those features are already found in many of today’s decentralized trading platforms. Hyperliquid’s appeal lies in its technical aspects. Let’s review them below.
As mentioned, the team runs its own blockchain of the same name. It’s composed of the HyperEVM and HyperBFT. These two protocols allow Hyperliquid to provide Ethereum-compatible smart contracts and the speed and reliability of a custom layer-1 (L1), which makes it suitable for high-speed trading and building DeFi projects.
HyperEVM is an Ethereum Virtual Machine (EVM) integrated directly into Hyperliquid’s L1. It operates within the same consensus layer, HyperBFT, unlike standalone EVM implementations.
HyperEVM has three key characteristics:
Native Integration: HyperEVM smart contracts can interact directly with Hyperliquid’s core functionalities, including on-chain spot and perpetual futures order books, streamlining the interaction between EVM-based applications and the platform’s trading infrastructure. Enabled Execution Model: Hyperliquid’s execution model enables the L1 and HyperEVM to operate sequentially, so the EVM can access the state of the 1 blockchain from the previous block and submit actions for the next block. As a result, it delivers predictable and consistent operations. Token Standards and Liquidity: ERC20 tokens on HyperEVM are fungible with their corresponding native assets on Hyperliquid’s L1. This allows users to trade tokens with minimal fees and access deep liquidity while also using these tokens in EVM-based decentralized applications (dApps).
HyperBFT is Hyperliquid’s custom consensus algorithm, inspired by the Hotstuff protocol. It is designed to meet the demands of high-frequency trading while maintaining security and consistency across the ecosystem.
HyperBFT is characterized by three main features.
High Performance: Block confirmation times under one second, while median latency is 0.2 seconds, with 99th percentile latency at 0.9 seconds. This allows the platform to process over 200,000 transactions per second, with scalability potential exceeding 1 million orders per second as optimizations progress. Byzantine Fault Tolerance (BFT): As the name suggests, HyperBFT can tolerate up to one-third of malicious validators while maintaining consensus, ensuring robust security even in adverse conditions. Shared State Across Environments: Both the L1 and HyperEVM share the same state and data availability layers, maintaining consistency and synchronization throughout the ecosystem despite operating in separate execution environments. All in all, what makes traders and developers flock to Hyperliquid is the unified ecosystem made for advanced financial applications and more innovative trading options. Developers can leverage Ethereum-compatible smart contracts while benefiting from low latency, high throughput, and deep on-chain liquidity, making Hyperliquid more than just a DEX; it instead comes off as a high-performance platform for creating advanced trading tools and decentralized applications, all within a single environment.
The aforementioned deep on-chain liquidity is enabled through a concept that the team refers to as vaults.
How do these vaults work?
Users can deposit funds into a vault and start copy trading to earn a share of the PL. The community can provide collateral for liquidation or market-making strategies and share in the PL. Users can start their own vaults with a minimum of $100 and set their parameters. Users position and full trade history are public. Plus, its non-custodial, with withdrawals available after a determined lock-up price. This approach was quite different from most protocols, as these features are usually reserved for the exchange operators or privileged market makers. But the risk with these vaults is no different from other vaults; if traders become more profitable or the market-making strategy goes south, the yield is lower.
Hyperliquid’s native cryptocurrency, HYPE, powers the platform’s ecosystem as it’s used for decentralized governance, economic incentives, and fee payments. By holding HYPE coins, users can participate in the decision-making processes to influence updates and changes through governance mechanisms.
Moreover, HYPE can be staked to earn rewards while also contributing to the network’s security. For traders, the token offers practical benefits like reduced trading fees when used for transactions on the platform.
Hyperliquid’s allocation schedule was simple and heavily focused on its community to incentivize long-term growth:
38.88% for future emissions and community rewards 31% for the genesis airdrop 23.8% for contributors 6% for the Hyper foundation 0.3% for community grants
On November 29, 2024, Hyperliquid conducted a significant airdrop of its native token, HYPE, to nearly 100K eligible users. Many in the industry believe that it managed to set the standard for future airdrops. It was a generous distribution of value. The average allocation was worth around $45K $50K, making it one of the most lucrative airdrops in history.
Moving on, Hyperliquid didn’t follow the typical airdrops schedule wherein huge amounts of tokens were allocated to venture capitalists (VCs). Instead, they focused on its community, with 76.2% of the token supply earmarked for user-centric initiatives, while team members were vested for at least one year after the token generation event (which took place November 29, 2024). All of this is because Hyperliquid has no private investors.
Needless to say, this reinforced trust and set a new standard for community-focused token distributions. And even though tokens usually dump after users have received their beloved bags, it wasn’t the case with HYPE. It actually surged from $4 to $35 in the weeks ahead instead, and its TVL grew exponentially.
Source: DeFiLlama All in all, Hyperliquid prioritized quality over quantity, as only 94,000 users were eligible for the airdrop, while most projects usually targeted between 500K to over 1M users. Even with one million users, the average allocation would be around $5K, which would still be higher than the market standard.
It’s not all sunshine and rainbows. Hyperliquid, like all DeFi platforms, carries a non-zero chance of failure. That said, toward the end of 2024, there was significant controversy revolving around the protocol. It all started when security expert Taylor (Tay) Monahan raised alarms about wallet activity linked to North Korean hackers on the Hyperliquid platform, alleging that addresses associated with the Democratic Peoples Republic of Korea (DPRK) were trading ETH on Hyperliquid. Well, not trading, more like testing the platforms vulnerabilities according to the expert.
To say the allegations triggered a substantial sell-off is an understatement. Over $256 million in funds were withdrawn from the platform within 30 hours, while the HYPE token price plummeted by approximately 25%. By December 23, net outflows exceeded $502 million.
Hyperliquid Labs denied any form of security breach, saying:
There has been no DPRK exploit—or any exploit for that matter—of Hyperliquid. All user funds are accounted for.
They stated how committed they are to security, citing its bug bounty program and adherence to industry standards in blockchain analytics.
As of the time of writing this guide, there have been no reported incidents with the protocol. Funnily enough, the wallets associated with North Korean hackers were liquidated on-chain for half a million dollars.
Let’s round up what makes Hyperliquid stand out from its competitors in such a heated market.
High slippage often concerns traders on decentralized platforms due to the reliance on automated market makers (AMMs). This is why Hyperliquid takes elements from traditional platforms and employs a decentralized orderbook model, leading to efficient price matching, transparency, and significantly reduced slippage —even in volatile markets.
Hyperliquid allows users to perform cross-chain transfers across its entire ecosystem, meaning you can transfer cryptocurrencies from multiple blockchains such as Ethereum, Solana, Arbitrum, Base, and BNB Chain.
There are several bridges to choose from:
Arbitrum Bridge: The native Arbitrum bridge is the primary option if you want to transfer USDC from Arbitrum to Hyperliquid without transfer fees. While highly safe and free, it’s limited to Arbitrum. Synapse: A popular bridge that works with Ethereum, Base and Solana, allowing you to transfer crypto from around 20 blockchains with minimal fees. HyBridge: Hyperliquid’s community-developed protocol, which records millions of transactions daily. It supports transfers from seven blockchains, including Ethereum, Optimism, and Avalanche, to Hyperliquid
Hyperliquid was co-founded by Jeff Yan, who began his career in Hudson River Trading and then moved on to create Chameleon Trading, a market-making firm. Yan is usually very active on social media and has attended several conferences and interviews in popular cryptocurrency podcasts.
However most of its team members (like in most DeFi projects) remain either anonymous or use pseudonyms to protect their privacy. For instance, Hyperliquid was also co-founded by Iliensinc, while Xulian HL (@KingJulianIAm on X) is mentioned as a core contributor.
Yan and his team have stated that most of Hyperliquid contributors come from MIT, Harvard, Hudson River Trading.
While innovative, Hyperliquid has some fierce competition. Below are some of the best decentralized exchanges that are dominating the derivatives market.
GMX is one of the oldest and largest DEXs, focusing on providing spot and perpetual futures trading for a wide range of cryptocurrencies. Like Hyperliquid, users can trade BTC, ETH, SOL, and more using 50x leverage.
GMX has different fees depending on the type of order. Open and closing positions incur a 0.1% fee, while swaps range from 0.2% to 0.8% —depending on pool balance impact. GMX V2 reduces fees to 0.05% to 0.07% for positions and standard token swaps, while stablecoin swaps cost between 0.005% and 0.02%.
dYdX is the leading DEX specializing in perps contracts and margin trading, having recorded over $1 trillion in total trading volume by December 2023.
Despite its success, dYdX is more conservative on its approach, offering a maximum of 20x leverage on selected cryptocurrencies. Its low fees (0.02% and 0.05%, respectively), advanced trading features yet simple UI are the protocol’s main appeal.
It was built on the Ethereum blockchain before transitioning into its own chain, the dYdX Chain.
Jupiter Perps was launched in 2022 as a DEX and liquidity aggregator on the Solana blockchain. It’s not only fast, but also extremely generous with risk-on traders, allowing them to trade futures contracts with up to 100x leverage.
The platform supports WBTC, USDT, USDC, SOL, ETH, and more, allowing liquidity providers to lock assets in its vault for returns, with APYs that can go from 50% to over 70%.
Hyperliquid is a popular DEX operating on its own blockchain of the same name. It offers perpetual futures trading similar to traditional futures contracts.
The protocol combines elements of CeFi and DeFi to provide users with a high-performance, low slippage, and a user-friendly platform. It also supports a wide range of cryptocurrencies and innovative features such as scale orders, Hyperps, copy trading vaults, and tools for DeFi developers.
Hyperliquid stands out by integrating its own blockchain with Ethereum-compatible smart contracts, providing high transaction speeds and deep liquidity while allowing developers to build their own financial apps within the ecosystem.
It also introduces advanced trading features like scale orders, pre-launch token trading, and decentralized order books, reducing slippage and enhancing price efficiency. Its ecosystem includes unique tools like the Hyperp perpetuals and democratized market-making strategies through liquidity vaults.
While Hyperliquid’s main focus is providing one of the best DEXs in the market, recent security concerns have been raised after DPRK hackers started testing its trading platform. Moreover, its reliance on a small number of validators and quorum-based transaction approval generated fear.
Despite this, the platform has not suffered any hack or experienced any exploits or attacks.
Hyperliquid has carved out its own niche within the perpetuals trading ecosystem, daring to take more risks where others would remain conservative.
The most attractive features of this protocol are the light and user-friendly UI and the wide range of options available to trade while adding their unique touches to them with features such as Scale Orders, Hyperps, and their own copy trading system.
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