The $HYPE of Hyperliquid

- Executive Summary
- 1. Introduction to Hyperliquid
- 2. Hyperliquid’s Unique Selling Proposition (USP)
- 3. Token Utilities
- 4. Point System
- 5. Token Allocation
- 6. Airdrop Distribution & Eligibility
- 7. The Impact of $HYPE Airdrop on the Hyperliquid Ecosystem
- 8. Hyperliquid ($HYPE) TGE and Listing Details
- 9. Comparison of Token Listings: CEX vs. DEX
- 10. Conclusion and Future Outlook
Executive Summary
As blockchain technology evolves, Hyperliquid emerges as a groundbreaking decentralized exchange (DEX) built on its custom Layer 1 blockchain. Designed explicitly for perpetual futures trading, Hyperliquid combines the speed and performance of centralized exchanges with the transparency and security unique to decentralized systems, achieving sub-second block latencies.
Hyperliquid’s innovations include gasless trading, the HyperBFT consensus mechanism, and automated liquidity management, delivering a seamless and efficient trading experience. Yield-generating vaults and copy-trading tools appeal to retail and institutional traders, while Hyperliquid’s self-funded model ensures alignment with its community.
By combining cutting-edge technology with a decentralized ethos, Hyperliquid sets a new standard for speed, efficiency, and trust in blockchain trading.
1. Introduction to Hyperliquid
Hyperliquid is a cutting-edge blockchain ecosystem that combines a custom Layer 1 (L1) blockchain with its flagship decentralized exchange (DEX) for perpetual futures trading. As both the infrastructure and application, Hyperliquid offers an unprecedented trading experience by delivering the speed of centralized exchanges with the transparency, security, and trust of decentralization.
Unlike general-purpose blockchains, Hyperliquid’s Layer 1 is purpose-built for trading. It enables sub-second block latencies and can process up to 100,000 orders per second. This tailored approach allows Hyperliquid to optimize every aspect of perpetual trading, from execution speed to liquidity management, setting a new standard in decentralized finance.
Behind this innovation is Hyperliquid Labs, led by Jeff and Iliensinc, Harvard classmates who have assembled a team of experts from institutions such as Caltech and MIT. The team also brings experience from top organizations like Airtable, Citadel, Hudson River Trading, and Nuro, ensuring technical and operational excellence.
Entirely self-funded, Hyperliquid prioritizes alignment with its community, with no external investors, market makers, or fees paid to third-party companies. As stated by the founder on X:
“With Hyperliquid, there are no investors, no market makers, and no fees paid to any company. Billions of dollars of value were created by a common vision and relentless hard work. This value went directly to hundreds of thousands of users, building a passionate community with real skin in the game.”
2. Hyperliquid’s Unique Selling Proposition (USP)
Hyperliquid sets itself apart by offering a seamless, high-performance trading experience underpinned by advanced features that maximize efficiency, accessibility, and profitability. These innovations span token creation, liquidity management, gasless trading, sub-second block latencies, and yield generation, creating a robust ecosystem for traders and developers.
2.1 HIP-1: A Native Standard for Spot Assets
HIP-1 is a key feature that enables projects to launch native tokens through a streamlined, five-step on-chain process. This process allows creators to define essential parameters such as token name, supply cap, and initial balances, making token creation accessible and efficient. The steps include deploying the token, setting initial balances, and activating Hyperliquidity, ensuring smooth integration with the ecosystem. Below is an illustration of the deployment process, highlighting the simplicity and user-friendly interface of HIP-1:
Figure 1: Step-by-step process for deploying a native spot asset using Hyperliquid’s HIP-1 standard

2.2 HIP-2: Hyperliquidity
HIP-2 addresses a critical challenge in decentralized trading: liquidity. It provides an automated, on-chain liquidity system that facilitates market-making without relying on third-party market makers.
This system automatically places buy and sell orders for each token on the order book, adjusting those orders to align with market prices. HIP-2 effectively brings the principles of Automated Market Makers (AMMs) into a traditional order book model, making it more accessible to traders who prefer precise buy/sell pricing. This approach ensures that tokens maintain liquidity, creating a stable trading environment for creators and traders.
2.3 User Experience Enhancements
Hyperliquid focuses on providing an efficient and cost-effective user experience, particularly for active traders. Two notable features include:
- Gasless Trading: Users can place orders without paying gas fees, reducing the costs of frequent traders. Only minimal fees are applied for deposits and withdrawals.
- HyperBFT: Hyperliquid uses the HyperBFT consensus mechanism to handle high trading volumes with minimal delays. Most trades are processed in 0.2 seconds or less, and the system can handle up to 100,000 orders per second, making it highly scalable. The consistent performance of HyperBFT is illustrated in the graph below:
Figure 2: Hyperliquid Block Time Averages over 12 hours, showing consistent sub-second latencies

2.4 Yield Opportunities with Vaults and Copy-Trading
Hyperliquid’s innovative vault systems offer users multiple opportunities to generate passive income. These vaults cater to different risk profiles and trading strategies, enhancing user participation and ecosystem growth.
- User Vaults: Users can deposit funds into a vault that automatically copies the trades of experienced traders. This feature allows users to profit from strategies they may not be able to execute themselves.
- Protocol Vaults: Users can deposit funds into the Hyperliquidity Provider Vault, which collects returns from activities such as market-making, liquidations, and protocol fees. This vault is designed to generate lower-risk yields, providing users with more predictable and stable returns.
3. Token Utilities
Hyperliquid’s token utility system is designed to drive platform growth, incentivize user participation, and create a sustainable ecosystem. It consists of multiple tokens, each serving a unique purpose within the network. This section outlines the primary tokens of the Hyperliquid ecosystem, their roles, and their contributions to the platform’s functionality and community engagement.
3.1 $PURR: The Foundational Meme Token of Hyperliquid
Before the native utility token $HYPE was introduced, Hyperliquid launched $PURR, the inaugural HIP-1 native token launched on the Hyperliquid L1 blockchain. Officially recognized as a meme coin, $PURR is represented by a cute cat, the official mascot of Hyperliquid, adding a fun and engaging context for users. Unlike typical token launches, $PURR was introduced without a token sale or planned utility, primarily fostering user engagement. Below are the key details of $PURR, including its total supply, distribution strategy, and unique features:
- Fixed Supply: 1 billion tokens, with 50% airdropped to users and the other 50% locked in the PURR/USDC liquidity pool.
- Ecosystem Rewards: $PURR holders are automatically eligible for all future distributions of new spot and meme tokens on the Hyperliquid network, incentivizing long-term participation.
- Innovation Testbed: $PURR demonstrates the capabilities of the HIP-1 token standard, paving the way for other projects to adopt and launch native tokens on the Hyperliquid L1.
$PURR integrates users into Hyperliquid’s ecosystem and is an innovative experiment in decentralized token standards.
3.2 $HYPE: The Native Utility Token of Hyperliquid
The $HYPE token is the native utility token of the Hyperliquid platform, central to its decentralized ecosystem. It powers the decentralized exchange, enables governance, secures the network, and supports the development of decentralized applications (dApps) on HyperEVM. $HYPE drives liquidity, incentivizes user participation, and ensures the platform’s sustainability, acting as both a value transfer tool and a means for community engagement.
Key Utilities of $HYPE:
- Fuel for HyperEVM: $HYPE powers HyperEVM, Hyperliquid’s execution environment, enabling the development and deployment of decentralized applications (dApps) on the platform.
- Trading on the DEX: $HYPE can be traded on Hyperliquid’s decentralized exchange (DEX) in spot and perpetual trading pairs, adding liquidity and providing trading opportunities.
- Network Security: $HYPE is used in the HyperBFT consensus mechanism, where users stake their tokens to help secure the network and validate transactions.
- Governance: Token holders can use $HYPE to participate in governance decisions, such as protocol upgrades and fee structures, ensuring decentralized platform control.
- Community Rewards: $HYPE is distributed to users as rewards for contributing to the platform’s growth through activities such as staking, providing liquidity, and trading. These incentives encourage active participation and strengthen the ecosystem.
4. Point System
Hyperliquid’s points program was introduced to incentivize user activity and bootstrap growth during the platform’s early stages. Launched in two phases, the program rewarded users with points for trading on the Hyperliquid DEX, locking USDC in the liquidity pools, and referring friends. Over 51 million points were distributed among users.
4.1 Points Distribution
Figure 3: Hyperliquid Points Distribution

- Season 1 (November 2023 – April 2024):
1,000,000 points were distributed weekly over six months, primarily awarded based on perpetual trading volume. - Season 1.5 (May 2024):
8,000,000 retroactive points were awarded to users who traded organically in May. - Season 2 (June 2024 – September 2024):
- The focus shifted to incentivizing activity on Hyperliquid’s Layer 1 blockchain and the spot trading ecosystem. Points were awarded based on both spot and perpetual trading volumes.
4.2 Point Earning Methods
Users earned points through the following activities:
- Trading Activity:
- Points were awarded based on both spot trading and perpetual trading volumes.
- Liquidity Pool (HLP):
- Users earned points passively over time by locking USDC in the Hyperliquid Liquidity Pool. The longer liquidity remained locked, the more points were accumulated.
- Referral Program:
- Users can invite others to join the platform and earn points based on their activity:
- The referral system is activated after generating $10,000 in trading volume.
- Earn 1 point for every 4 points generated by invited users.
- Users can invite others to join the platform and earn points based on their activity:
5. Token Allocation
The allocation strategy of the $HYPE token reflects a well-balanced approach that fosters both short-term adoption and long-term sustainability of the Hyperliquid ecosystem. The total supply of $HYPE is capped at 1,000,000,000 tokens, distributed across various stakeholders and functionalities to ensure ecosystem stability and growth.
Figure 4: $HYPE Token Allocation and Vesting Schedule

5.1 The Strategy Behind Token Allocation
The $HYPE token allocation demonstrates a strong commitment to community empowerment and ecosystem development. Many tokens are dedicated to future emissions and community rewards, ensuring sustained engagement and alignment with the platform’s decentralized ethos. The allocation to Genesis participants rewards early adopters and establishes a foundation of loyal users, while the vested tokens for core contributors align their interests with the platform’s long-term success. Additionally, the modest allocation to the foundation highlights the lean and community-focused operational model of Hyperliquid. At the same time, including funds for community grants fosters innovation by empowering users to propose and execute projects that enhance the ecosystem.
This strategy incorporates several strengths that reinforce Hyperliquid’s position as a leader in decentralized finance:
- Community-Centric Design: Over 70% of the tokens are allocated to initiatives that directly engage and empower the community, reflecting Hyperliquid’s commitment to decentralization.
- Long-Term Focus: The vesting schedule for core contributors mitigates short-term sell-off risks and ensures sustained alignment with the platform’s growth.
- Innovation Support: Dedicated community grants and emissions create opportunities for continuous ecosystem expansion and user-driven initiatives.
Liquidity Optimization: The allocation for HIP-2 liquidity provisioning ensures robust market functionality and an efficient trading environment.
6. Airdrop Distribution & Eligibility
Hyperliquid’s airdrop was one of the largest of the year, distributing approximately 274 million tokens to 94,000 addresses, as illustrated in the graphs below. On December 1st, each recipient received an average of 2,915 $HYPE tokens, valued at $9.8 per token—equivalent to $2,850 per address. However, the average allocation masks significant disparity in distribution. Many participants received far fewer tokens, with the median allocation being just 64.53 tokens.
A closer look at the distribution reveals that around 38.7% of users received between 10 and 100 tokens, while 17.9% received less than 10 tokens. In total, 56.6% of participants received fewer than 100 tokens. Additionally, 83.9% of all recipients received under 1,000 tokens. These numbers highlight a noticeable imbalance, as large holders (whales) skewed the averages. While the airdrop generated significant excitement, the distribution pattern underscores the uneven nature of token allocation across participants.
Figure 5: Distribution of $HYPE tokens across recipients

6.1 Extended Claim Window and Eligibility Concern
Many users faced difficulties during the $HYPE airdrop, with some unaware that accepting the terms and conditions were required to claim their tokens. This oversight and technical difficulties frustrated numerous participants after they missed their opportunity to claim. Additionally, some users were excluded entirely from the event, with several Twitter users sharing screenshots of error messages stating, “Your address is not eligible to participate in the Genesis Event due to repeated attempts to access it from a restricted jurisdiction.”
In response to these complaints, the Hyperliquid team addressed the issues by reopening the claim window for an additional 24 hours on November 12, providing affected users another opportunity to claim their tokens.
7. The Impact of $HYPE Airdrop on the Hyperliquid Ecosystem
The $HYPE airdrop significantly impacted user activity, transaction volumes, and ecosystem growth. This section analyzes the key outcomes, focusing on metrics such as user acquisition, engagement, and the broader implications for the Hyperliquid platform.
Figure 6: Hyperliquid Cumulative New Users and Number of Trades Metrics

7.1 Daily New Users
- Expectation: The airdrop was expected to attract a significant influx of new users, substantially increasing the platform’s daily registrations.
- Outcome: Achieved. Before the airdrop, Hyperliquid averaged fewer than 500 new users daily, with an average of just 150 users. However, during the airdrop on November 29th and 30th, the platform saw 10,993 new users in just two days, surpassing the total new users count of the previous month.
7.2 Transaction Volume
- Expectation: As users engaged with the platform during and after the airdrop, a substantial increase in trading volume was expected.
- Outcome: Not achieved. Despite the sharp rise in user activity, transaction volume remained stable at approximately $18 billion and $19 billion on November 29th and 30th, respectively. This suggests users were exploring the platform rather than engaging in high-value trading.
7.3 User Engagement
- Expectation: The airdrop was expected to sustain user interest and participation in the ecosystem, avoiding the typical post-airdrop decline seen in other projects.
- Outcome: Achieved. Unlike other projects where user numbers drop sharply post-airdrop, Hyperliquid demonstrated strong retention. User engagement remained significantly higher than pre-airdrop levels, showcasing the platform’s ability to retain new users.
7.4 Ecosystem Activity
- Expectation: The airdrop was designed to act as a catalyst for overall ecosystem growth, including increased token utility and liquidity on the decentralized exchange (DEX).
- Outcome: Partially achieved. While the airdrop successfully brought new users to the platform, its impact on overall ecosystem activity and liquidity was less pronounced. Stable transaction volumes suggest that more efforts are needed to convert user activity into meaningful trading engagement.
8. Hyperliquid ($HYPE) TGE and Listing Details
Hyperliquid’s TGE ($HYPE) has been one of the most successful events of the year, marked by unparalleled community enthusiasm and remarkable price performance. The launch saw immediate traction, highlighting the platform’s ability to generate interest and trust within the crypto ecosystem.
8.1 TGE and Initial Listing:
- TGE Date: November 29, 2024
- Initial Launch Price: $2
- Price Movement: Just 3 weeks after its release, $HYPE experienced an extraordinary surge, climbing 1,500% to $30.
8.2 Listing Details:
- Exclusively Listed: Initially available only on Hyperliquid DEX, $HYPE was later listed on several centralized exchanges (CEX), including Bitget, Kucoin, and BingX.
- Primary Trading Pair: HYPE/USDC
- No Private Investors or Market Makers: Hyperliquid ensured that the community receives the majority of tokens, avoiding influence from external parties.
8.3 Reasons for Exclusive Release on Hyperliquid:
- Community Focus: Distributing a significant portion of tokens directly to the community allowed Hyperliquid to foster a strong and engaged user base. By avoiding reliance on external market makers or investors, the platform minimized risks of centralized control or manipulation, ensuring the community remained at the heart of the ecosystem.
- Commitment to Decentralization: Hyperliquid’s approach aligns with its philosophy of decentralization, where the power is vested in the users rather than centralized entities. By giving users direct access to the initial distribution, Hyperliquid reinforced its mission of creating a user-owned network.
- Control Over Tokenomics: The platform safeguarded its token economics by managing the initial supply and distribution exclusively on Hyperliquid. This strategy helped prevent potential market manipulation, price dilution, or other external disruptions that often arise with immediate multi-platform listings.
- Boosting Platform Growth: Releasing $HYPE solely on Hyperliquid incentivized users to engage directly with the platform, boosting liquidity, trading activity, and the user base.
- Avoiding Initial Price Volatility: By launching on a single, controlled platform, Hyperliquid reduced the risk of extreme price fluctuations often associated with simultaneous listings on multiple exchanges. This created a more stable environment for the token’s initial market entry, fostering trust among early adopters.
- Focus on User Experience: The exclusive release allowed Hyperliquid to optimize the user experience during the TGE. This ensured smooth onboarding, streamlined trading, and a positive impression for users interacting with $HYPE, setting the stage for long-term adoption and loyalty.
9. Comparison of Token Listings: CEX vs. DEX
Hyperliquid’s decision to launch and list its native $HYPE token on its decentralized exchange (DEX) aligns significantly with its vision of decentralization and user empowerment. However, listing $HYPE on major centralized exchanges (CEXs) in the future could provide complementary benefits, such as greater liquidity, wider market exposure, and the ability to attract institutional investors. Striking a balance between decentralization and broader accessibility will be critical to scaling Hyperliquid’s ecosystem sustainably.
Figure 7: Hyperliquid DEX vs. CEX: Factor Comparison

10. Conclusion and Future Outlook
Hyperliquid has integrated innovative technologies and prioritized community-driven growth, laying a solid foundation for a decentralized trading platform. Unlike traditional Layer 1 blockchain, Hyperliquid stands out as an independent and innovative network free from external investors and venture capital interference. This unique approach enables Hyperliquid to focus entirely on building its ecosystem and prioritizing the needs of its community without the constraints or conflicting interests that often accompany external funding.
Looking ahead, Hyperliquid’s success will depend on its ability to sustain growth while maintaining its core values. Key to its future will be:
- Ecosystem Development and DeFi Expansion: Hyperliquid’s primary focus remains decentralized finance, leveraging its custom Layer 1 blockchain to deliver advanced trading features, such as perpetual futures and staking. By doubling down on DeFi-specific innovations, Hyperliquid can strengthen its position within the ecosystem. This includes enhancing its staking features, improving yield-generating tools, and introducing more robust decentralized trading solutions tailored to retail and institutional traders. Strategic collaborations within the DeFi sector will drive further adoption and liquidity growth.
- Global Accessibility Through EVM Compatibility: The forthcoming integration of Ethereum Virtual Machine (EVM) compatibility is poised to revolutionize Hyperliquid’s accessibility. This enhancement will simplify onboarding for developers familiar with Ethereum’s ecosystem and unlock a vast pool of potential users and liquidity. By bridging the gap between Hyperliquid and other EVM-compatible networks, this initiative positions the platform to capture a significant share of the broader blockchain market.
- Regulatory Resilience: As the blockchain industry faces increasing scrutiny, Hyperliquid must proactively engage with regulatory bodies to establish frameworks that ensure compliance without compromising decentralization. Transparent governance structures and clear communication with stakeholders will be critical in maintaining trust and mitigating risks associated with regulatory uncertainties.
- Innovative Infrastructure Enhancements: To stay ahead of the competition, Hyperliquid must continuously advance its HyperBFT consensus mechanism and introduce scalable, user-centric features. To enhance platform’s performance and appeal, Hyperliquid must explore avenues such as zero-knowledge proofs, advanced interoperability protocols, and AI-driven optimization.
- Long-Term Community Engagement: Hyperliquid’s unique approach of prioritizing community interests over external influences must remain a cornerstone of its strategy. Initiatives such as incentivized governance, educational programs, and transparent decision-making processes will ensure sustained community participation and loyalty.
- Adoption of Decentralized Governance Models: Empowering the community through decentralized governance can solidify Hyperliquid’s ethos of putting users first. By enabling token holders to shape the platform’s future direction, Hyperliquid can ensure alignment with its user base’s values while fostering innovation and adaptability.
With its unique combination of speed, transparency, and user empowerment, Hyperliquid is well-positioned to lead the evolution of decentralized finance. If it can capitalize on its strengths while addressing potential challenges, Hyperliquid has the potential to set new standards in blockchain innovation and reshape the decentralized trading landscape.