Hyperliquid: A High-Performance L1 Blockchain for a Fully On-Chain Open Financial System.

What is Hyperliquid

Friends, imagine the ultra-fast, high-volume centralized exchanges we use every day, like Binance or OKX. They’re like the most efficient financial highways in the city, but all the vehicles (your funds and trading records) are managed by a single company. In the blockchain world, we strive for decentralization—no central authority controlling everything, allowing everyone to participate transparently and fairly.

Hyperliquid (HYPE for short) is a truly unique project, like a “superhighway” custom-built for financial trading in the blockchain world. This highway isn’t open to all types of vehicles (like social apps or games), but is specifically designed for financial transactions that demand extreme speed and efficiency, especially perpetual contract trading (a special type of futures trading with no expiry date).

At its core is a technology called Layer 1 blockchain (L1). You can think of it as a brand-new, independent blockchain main road, not built on top of another chain. The most impressive part of this highway is that it can achieve speeds comparable to centralized exchanges—processing up to 100,000 orders per second with ultra-low latency, almost instant execution. Even better, it doesn’t require extra “gas fees” for transactions, greatly reducing trading costs.

Hyperliquid mainly serves users who want to trade large volumes at high speed in a decentralized environment, especially professional traders and market makers. It offers a fully on-chain order book, meaning all buy/sell orders and trading records are public and verifiable, unlike some decentralized exchanges where part of the order info may be handled off-chain.

Project Vision and Value Proposition

Hyperliquid’s vision is ambitious: to build a fully on-chain open financial system. Simply put, it aims to bring the efficient, complex financial services of traditional finance onto the blockchain, making them more transparent, fair, and accessible.

The core problem it wants to solve: current decentralized finance (DeFi) is secure and transparent, but often not fast enough, and the trading experience lags behind centralized exchanges; while centralized exchanges are fast, they carry centralization risks, such as lack of transparency, vulnerability to attacks, or misappropriation of user funds (as seen in some exchange blowups). Hyperliquid’s goal is to have the best of both worlds: maintain the security and transparency of decentralization, while achieving the performance and user experience of centralized exchanges.

What sets it apart from similar projects is that it’s not building a trading platform on an existing blockchain, but constructing its own dedicated blockchain from scratch. This chain is optimized for high-performance trading and uses a fully on-chain order book model, which is rare among decentralized exchanges. You can think of it as: other decentralized exchanges might be driving sports cars on regular roads, while Hyperliquid has built a racetrack designed specifically for sports cars—so it can go faster and more smoothly.

Technical Features

Hyperliquid’s high performance is thanks to its unique technical architecture:

• Layer 1 Blockchain (L1)

  Hyperliquid is an independent Layer 1 blockchain, like Ethereum or Bitcoin, with its own network and security mechanisms. This means it doesn’t rely on other blockchains to operate and can be deeply optimized for its own needs.

• Consensus Mechanism

  It uses a custom consensus algorithm called HyperBFT, inspired by advanced mechanisms like Hotstuff. Consensus mechanisms are like the “voting rules” for all participants in the blockchain network to reach agreement. HyperBFT is designed to make this voting process super fast, enabling rapid finality and strong security for transactions.

• Dual Architecture: HyperCore and HyperEVM

  Hyperliquid’s execution layer is split into two main parts:

  • HyperCore: This is its “trading engine,” dedicated to handling high-speed perpetual contracts and spot order book trading. All orders, cancellations, trades, and liquidations are processed transparently on-chain, with single-block finality. Think of it as Hyperliquid’s “core trading hall”—extremely efficient.
  • HyperEVM: This is Hyperliquid’s EVM-compatible layer. EVM stands for Ethereum Virtual Machine, the environment where Ethereum smart contracts run. With HyperEVM, developers can deploy and run general-purpose smart contracts on Hyperliquid, just like on Ethereum—such as lending protocols, NFT marketplaces, etc. It’s like having an “innovation lab” next to the “core trading hall,” allowing more applications to grow on Hyperliquid’s high-speed infrastructure.

• High Performance

  Hyperliquid achieves sub-second transaction latency and can process up to 100,000 orders per second. This level of performance is crucial for high-frequency traders and market makers, giving them a decentralized experience close to that of centralized exchanges.

• Fully On-Chain Order Book

  Unlike many decentralized exchanges, Hyperliquid’s order book operates entirely on-chain. This means all buy/sell order information is recorded on the blockchain, increasing transparency and security, and avoiding the opacity and potential manipulation risks of off-chain order books.

Tokenomics

The core of the Hyperliquid ecosystem is its native token, symbol HYPE.

• Token Basics and Use Cases

  The HYPE token plays multiple roles in the Hyperliquid network:

  • Network Security: HYPE is used for staking to secure the network. Validators (nodes maintaining the network) must stake at least 10,000 HYPE to participate. Staked HYPE is subject to a lock-up period to ensure network stability.
  • Gas Fees: On HyperEVM, HYPE is used to pay gas fees for transactions and smart contract execution.
  • Trading Fee Discounts: Users who hold and stake HYPE may receive trading fee discounts.
  • Buyback and Burn: Part of Hyperliquid’s revenue is used to buy back and burn HYPE tokens, helping reduce circulating supply and potentially positively impacting token value.
  • Auction Participation: HYPE is also used to participate in certain ecosystem auctions.
  • Governance: HYPE holders have voting rights on protocol upgrades and proposals, participating in community governance.

• Issuance Mechanism and Total Supply

  HYPE has a maximum total supply of 1 billion tokens.

• Token Allocation and Unlocking

  Hyperliquid’s token allocation is highly community-focused, with over 70% allocated to the community.

  • Genesis Airdrop: At the token generation event (TGE), 31% of tokens were airdropped to about 94,000 early users. This is a very large-scale community distribution, and notably, no tokens were allocated to venture capital (VC) or external investors.
  • Future Emissions and Community Rewards: 38.9% of tokens are reserved for future emissions and community rewards.
  • Core Contributors: 23.8% of tokens are allocated to core contributors, typically with lock-up and linear vesting. For example, contributor tokens are locked for 1 year post-genesis, then gradually unlocked over the next 2 years, with most expected to unlock by 2027–2028.
  • Hyper Foundation Budget: 6% of tokens are allocated to the Hyper Foundation budget.
  • Community Grants: 0.3% of tokens are allocated for community grants.

• Recent Developments

  Recently, there’s been a proposal to reduce HYPE’s total supply by over 45% (burning more than 450 million tokens) to address concerns about future large unlocks and better reflect the project’s fundamentals.

Team, Governance, and Funding

• Team

  The team behind Hyperliquid is Hyperliquid Labs, a group of experienced professionals. Core members include Harvard classmates Jeff Yan and iliensinc. Team members also hail from top schools like Caltech and MIT, and have worked at companies such as Airtable, Citadel, Hudson River Trading, and Nuro. They have deep experience in crypto market making, giving them a strong understanding of existing platform limitations. The team is small—about 11 people—but highly skilled, tech-driven, and emphasizes a culture of “full ownership, high standards, and technical depth.”

• Governance

  Hyperliquid’s governance is decentralized. HYPE holders can participate in project decisions, with the right to propose and vote on protocol upgrades and major changes, ensuring the project’s direction aligns with community interests.

• Funding

  A notable feature: Hyperliquid is a self-funded project, with no external VC funding. This allows the team to focus on what they believe is right for product development, free from external investor pressure or influence. This independence also reflects their community-first commitment, returning all fees and value to the community.

Roadmap

Hyperliquid’s roadmap shows its ambition to evolve from a high-performance decentralized exchange into a comprehensive financial ecosystem.

• Key Historical Milestones and Events

  • 2020: The team initially operated as Chameleon Trading, market making in crypto.
  • Summer 2022: The team began bringing their trading expertise into DeFi and started building Hyperliquid.
  • 2023: Hyperliquid launched its core product—a decentralized perpetual contract exchange (DEX).
  • October 31, 2023: Closed testing ended, with points distributed to 11,500 users.
  • November 1, 2023: First quarter points program launched.
  • January 23, 2024: Sub-account feature launched.
  • February 21, 2024: TWAP (Time-Weighted Average Price) order feature launched.
  • November 29, 2024: HYPE token officially launched, with a large-scale airdrop setting a new community standard.
  • December 30, 2024: Mainnet staking went live, with over 400 million HYPE staked.
  • February 15, 2025: BTC integrated, supporting BTC spot trading, deposits, and withdrawals.
  • March 4, 2025: Delegation program launched to enhance network security and decentralization.
  • March 19, 2025: Staking tiers launched, offering trading fee discounts based on HYPE staked.
  • May 5, 2025: USDe integrated, supporting USDe spot trading and HyperEVM.
  • May 6, 2025: Team redistributed 47 million HYPE to 11 validators to promote decentralization.
  • May 9, 2025: USDT integrated, supporting USDT spot trading and HyperEVM.
  • May 15, 2025: Major cryptocurrencies integrated, including BTC, ETH, and SOL.

• Future Key Plans and Milestones

  • 2025 Focus: Achieve full decentralization, expand the HyperEVM ecosystem, and make Hyperliquid the liquidity infrastructure for on-chain finance.
  • HyperEVM Ecosystem Expansion: Fully launch the HyperEVM environment, allowing developers to deploy various smart contract applications—lending protocols, NFT marketplaces, etc.—leveraging Hyperliquid’s on-chain liquidity.
  • Permissionless Liquidity: Enable permissionless liquidity features, allowing more users to participate in market making.
  • Cross-Chain Integration and Advanced Trading Features: Plans for cross-chain integration and more advanced trading features, such as portfolio margin.
  • Native Stablecoin: Hyperliquid validators voted to introduce the official stablecoin USDH, issued and managed by Native Markets, backed by US Treasuries and cash.
  • HIP-3 Implementation: HIP-3 (Hyperliquid Improvement Proposal) is in testnet, planned for mainnet launch in Q4 2025.
  • Institutional Custody: Partnerships with companies like BitGo to provide secure, compliant custody for HYPE and other on-chain assets for institutions.
  • Continuous Improvement: Ongoing platform and user experience improvements based on community feedback and market needs.

Common Risk Reminders

Every blockchain project comes with risks, and Hyperliquid is no exception. It’s crucial to understand these risks before participating:

• Technical and Security Risks

  • Smart Contract Risk: Hyperliquid’s decentralized perpetual contract exchange relies on the correctness and security of Arbitrum bridge smart contracts. Vulnerabilities could lead to fund loss.
  • L1 Blockchain Risk: Hyperliquid runs on its own L1 blockchain, which, as a relatively new L1, may not have undergone the extensive testing and review of mature L1s like Ethereum.
  • Oracle Manipulation Risk: Hyperliquid relies on validator-maintained oracles for market data. If oracles are attacked or manipulated, market prices could be affected, leading to unfair liquidations.
  • Private Key Leakage Risk: In a recent incident, a user lost about $21 million due to private key leakage. This highlights the importance of users safeguarding their keys—decentralized platforms shift asset custody responsibility to users, so strict security measures like hardware wallets and multisig are essential.

• Economic Risks

  • Market Liquidity Risk: As a relatively new protocol, Hyperliquid may face liquidity shortages in its early stages. Low liquidity can cause slippage and impact trading experience, potentially leading to losses.
  • Price Volatility and Liquidity Challenges: Large-scale airdrops may cause sharp token price swings, especially after initial hype fades, possibly leading to price drops.
  • Competition Risk: Hyperliquid faces fierce competition from other mature Layer 1 blockchains (like Ethereum, Solana) and other decentralized exchanges.

• Compliance and Operational Risks

  • Validator Count: While Hyperliquid plans to increase validator numbers, the current limited count may affect the degree of network decentralization.

Remember, the above is not a complete list of all potential risks. Always conduct your own thorough research and risk assessment before making any decisions. This is absolutely not investment advice.

Verification Checklist

To help you further understand and verify the Hyperliquid project, here are some key checkpoints:

• Block Explorer Contract Address

  HYPE token’s contract address on Ethereum:

  0xD967A2248232d8D37e49196D46beA3830Ef1A2aA
  . You can check this address on Ethereum block explorers (like Etherscan) to view token holder distribution, transaction history, etc.

  Hyperliquid also has its own EVM-compatible block explorer, HyperEVMScan, for querying transactions and activity on its HyperEVM chain.

• GitHub Activity

  Hyperliquid is very active on GitHub. You can visit its official GitHub repo (e.g.,

  github.com/hyperliquid-dex
  ) to view codebase, development progress, and community contributions. Active GitHub usually means ongoing development and maintenance.

• Official Docs/Whitepaper

  While the project may not have a traditional “whitepaper,” its official documentation (

  docs.hyperliquid.xyz
  ) provides detailed technical and project info. This is the most authoritative source for understanding the project.

• Community Activity

  Follow Hyperliquid on Twitter (X), Discord, and other social/community platforms to gauge community discussion, development updates, and user feedback.

Project Summary

In summary, Hyperliquid is an ambitious blockchain project that, by building its own high-performance Layer 1 blockchain, aims to bring the speed and efficiency of centralized exchanges to decentralized finance, especially in the perpetual contract trading space. Its unique HyperBFT consensus mechanism, HyperCore trading engine, and HyperEVM smart contract platform form its technical foundation, enabling sub-second latency and high throughput.

The project team is made up of experienced professionals and has adopted a self-funded, community-centric strategy, allocating most tokens to the community—a rarity in crypto projects. Its roadmap clearly lays out plans to expand from core trading functions to a comprehensive financial ecosystem.

However, like all emerging technologies, Hyperliquid carries technical, security, and economic risks, such as insufficient testing of a new L1, potential oracle manipulation, and losses from poor private key management.

Hyperliquid is undoubtedly an innovator worth watching in DeFi, aiming to solve the performance bottleneck of decentralized trading and lay the foundation for future on-chain financial systems. But always remember: blockchain and crypto markets are volatile and risky. Do your own thorough research and consult professional financial advisors before making any investment decisions. None of the above constitutes investment advice.

For more details, users should research its official materials and community discussions themselves.