Hyperliquid needs developer growth to sustain $25B valuation

Hyperliquid (CRYPTO:HYPE), a layer-1 blockchain network, must attract a strong developer community to maintain the $25 billion market capitalisation of its HYPE token, according to asset manager VanEck in a research note dated January 6, 2025.

The network, which launched its HYPE token in November 2024, has seen rapid market growth, with its perpetual futures exchange capturing about 70% of the market share.

It processes around $260 million in daily transactions and is outpacing competitors like GMX (CRYPTO:GMX) and dYdX (CRYPTO:DYDX).

However, VanEck points out that Hyperliquid’s smart contract platform still lacks significant developer engagement.

If the blockchain cannot meet its growth expectations, it risks a potential downturn, as suggested by the "prisoner’s dilemma" that might affect many HYPE holders.

Hyperliquid's rise, fueled by its successful token airdrop, has been remarkable, with the HYPE token appreciating over 500% since its launch.

The token reached a high of $34 in December before stabilising at around $25 in early January.

Despite this, VanEck warns that without substantial development beyond the successful Perp DEX, Hyperliquid may struggle to maintain its valuation.

The project’s roadmap for 2025 includes launching an Ethereum Virtual Machine (EVM) smart contract platform, which VanEck sees as key to diversifying Hyperliquid’s revenue sources.

This expansion is viewed as essential for the blockchain to justify its current valuation and to attract long-term interest from developers.

Hyperliquid aims to become a more general-purpose blockchain, supporting decentralised applications beyond its DEX.

However, VanEck notes that many decentralised exchanges face challenges in establishing long-term competitive advantages due to the ease of replicating open-source platforms.

As of now, several Hyperliquid-native decentralised applications are already live on the EVM testnet, signaling progress in its diversification efforts.

At the time of reporting, the Hyperliquid (HYPE) price was $21.69.