Why Has Decentralized Exchange Hyperliquid Gained Traction So Quickly?

As DeFi investors prepare for the launch of the HYPE token, what has made Hyperliquid capture so much attention?

In just two years, Hyperliquid has quickly risen to become a leading protocol in the crypto derivatives market and one of the most active decentralized perpetual contract exchanges.

In the blockchain space, Hyperliquid stands out with its product-first strategy, achieving organic growth without significant incentives and maintaining financial independence as a fully bootstrapped team. This week alone, it processed $21 billion in trading volume, with its share of perpetual contract trading volume tripling this year—from about 11% in December 2023 to 33% this week.

Meanwhile, Hyperliquid has been running its own rewards program and is about to launch its highly anticipated HYPE token generation event (TGE). This will lay the groundwork for future decentralization, Ethereum Virtual Machine (EVM) compatibility, and community governance. (On November 29, HYPE launched at an opening price of $3.20, with a circulating supply of 333 million tokens. Within the first hour, trading volume reached $157 million. At the time of writing, the price has surged to over $9.40, representing a nearly 200% increase, with a market capitalization exceeding $3.2 billion.)

Let’s explore what sets Hyperliquid apart and what’s next following the HYPE launch.

What Makes Hyperliquid Unique
Hyperliquid’s standout features go beyond traditional derivatives, offering well-designed token creation tools, liquidity management, a seamless user experience, and income-generating functions.

HIP-1: Native Spot Asset Standard
In addition to perpetual contracts, Hyperliquid provides native token functionality through its HIP-1 token standard. Project teams can issue tokens via a simple five-step on-chain process, defining the token name, supply cap, initial balance, and other basic parameters.

The most unique aspect of HIP-1 is its Dutch auction system for token ticker symbols. During this auction, token creators bid for ticker symbols, with prices starting high and gradually decreasing over 31 hours. This ensures a fair, transparent bidding and listing environment, maintains reasonable costs, and regulates the pace of new token listings. Hyperliquid allows only about 280 new tokens to be listed annually, prioritizing quality over quantity and preventing the market from being flooded with low-quality projects.

HIP-2: Super Liquidity
HIP-2, also known as "Super Liquidity," ensures that tokens have sufficient liquidity to maintain market stability. HIP-2 achieves this by providing a fully automated on-chain liquidity system for HIP-1 tokens, eliminating the need for third-party market makers.

In practice, HIP-2 automatically places buy and sell orders for each token on Hyperliquid’s order book and frequently adjusts these orders to match current market prices. This feature creates a reliable, stable trading environment for both token creators and traders.

Inspired by automated market makers (AMMs) like Uniswap, HIP-2 applies AMM principles to the traditional order book model—the default mode for centralized exchanges preferred by many traders for precise pricing.

Essentially, HIP-2 acts as a built-in market-making service, ensuring that all tokens issued on the Hyperliquid platform enjoy a stable and convenient trading experience.

Exceptional User Experience
Hyperliquid’s user experience is smooth and cost-efficient, especially suited for active traders, with two standout features:

Fee-Free Trading: Hyperliquid adopts a fee-free trading model where users pay no transaction fees when placing orders—only small fees for deposits and withdrawals.
HyperBFT: The platform uses a custom consensus mechanism called HyperBFT to process large volumes of orders with ultra-low latency. Most trades are completed within 0.2 seconds, with a guarantee of under 0.9 seconds during peak periods. The system can handle up to 100,000 orders per second, with future updates increasing capacity further.
By combining free trading with fast, reliable processing capabilities, Hyperliquid offers a responsive and cost-effective trading experience for both casual users and high-frequency traders.

Income Opportunities Through Pools and Copy Trading
Another unique aspect of Hyperliquid is its two types of pools, designed to help users earn income by following experienced traders or participating in platform activities:

User Pools: These allow users to automatically replicate the trades of experienced traders. By depositing funds into the pool, users share in the gains and losses of the pool manager, enabling potential profits without active trading. This setup is ideal for users who want to participate in the market but lack advanced trading knowledge. However, users must choose pools carefully.
Protocol Pools: These focus on low-risk income generation. For example, the Super Liquidity Provider Pool earns returns from market-making, liquidation handling, and protocol fees. This pool provides a more stable and predictable source of income through Hyperliquid’s operations, making it suitable for users interested in low-volatility returns.
Looking Ahead After HYPE’s Launch
With the launch of HYPE, Hyperliquid is set for critical developments, including Ethereum compatibility via HyperEVM and a community-driven governance model.

HyperEVM
One of the most anticipated developments following the HYPE launch is HyperEVM, which will bring Ethereum compatibility to Hyperliquid. Currently, 35 teams are ready to deploy on HyperEVM. For example, Felix Protocol will launch the stablecoin feUSD, and HyperLend will introduce lending markets for Layer 1 chains.

Network Decentralization
With the issuance of HYPE, Hyperliquid’s journey toward decentralization will officially begin. Token holders will play a vital role in platform governance and operational security. Through HYPE, token holders will gain voting rights on key decisions such as platform updates, fee structures, and broader policy changes, ensuring the community has a say in shaping Hyperliquid’s direction.

Beyond governance, HYPE will also contribute to building a distributed validator network to enhance network security. Currently, Hyperliquid operates with four core validators run by team members. Following the token launch, Hyperliquid plans to implement a validator network to decentralize transaction validation and reduce reliance on a single operator. This approach will not only improve network security and transparency but also lay the foundation for a fully decentralized ecosystem, empowering users to actively participate in governance and resilience building.

Conclusion
In a short time, Hyperliquid has become a strong contender in the trading space, standing out with its product-first approach, fast and cost-efficient user experience, and focus on organic growth.

Following the HYPE token launch, the ecosystem is poised to move toward decentralization, enabling rapid expansion through Ethereum compatibility with HyperEVM, and strengthening security and resilience through a decentralized validator network. Hyperliquid’s future looks bright, and the timing of the HYPE launch positions it perfectly for further growth.