Hyperliquid: The Innovative Approach to Perpetual DEX Markets

By: crypto insight|2025/11/21 10:00:12

Key Takeaways

Hyperliquid channels 97% of exchange fees into buying back its native token, HYPE, showcasing a unique tokenomics strategy.
The platform sees substantial daily trading volumes, having reached over $80 billion and continues to grow.
HyperEVM adds a second layer, where gas fees are paid in HYPE, burning a portion of these fees, thereby creating further scarcity.
Potential market scenarios show HYPE’s price could range from $45 in a bear market to $180 in a bull market.

Understanding Hyperliquid’s Market Approach

As a leader in the decentralized exchange (DEX) sector, Hyperliquid employs a unique mechanism to promote the value of its token, HYPE, through a strategic buyback process. The emphasis here is on integrating nearly all of its transaction fees to repurchase its native token from the open market, creating a robust link between the platform’s success and token value. This strategy significantly leverages Hyperliquid’s position, making it enticing for investors bullish on the future of decentralized perpetual contracts.

The Financial Backbone of Hyperliquid

The financial engine driving Hyperliquid is its remarkable daily trading volume, which consistently hits billions. With an annualized revenue reaching over $1.3 billion, the company routs approximately 97% of fees into a “rescue fund.” This fund is geared towards buying back HYPE tokens, which has culminated in over $600 million being spent on repurchases, boosting token value and liquidity.

This system relies on sustained trading volumes and a steady market share, aligning Hyperliquid’s profitability with the HYPE price. In essence, as long as trading activities flourish and consistent market share is maintained, HYPE should, theoretically, appreciate in value.

Analyzing Hyperliquid’s Core Mechanisms

At the heart of Hyperliquid lies its core mechanism where nearly all fees are cycled back into HYPE buybacks. Perpetual and spot trading fees funnel into the company’s treasury, which diligently uses around 97% of these fees to purchase HYPE tokens. This creates an automatic buying pressure, emphasizing the platform’s dedication to enhancing token value.

Adding to its complexity is HyperEVM, Hyperliquid’s own EVM layer. Here, activities hinge on gas fees paid in HYPE tokens. This EIP-1559-like mechanism ensures that a portion of these fees is burnt, introducing a deflationary tactic to the system. Thus, Hyperliquid adheres to a dual strategy: aggressive buybacks and systematic token burns.

Envisioning Market Scenarios for Hyperliquid

Bear Market Scenario

Under bear market conditions, even if Hyperliquid maintains its 20-22% market share, the perpetual DEX market is expected to grow by 1.5x. This would result in an annual buyback estimate of around $18 billion. Based on an assumed market cap to buyback ratio of 8.5 times, this implies HYPE could see a price point of approximately $45–$50.

Baseline Scenario

In a stable market with moderate growth, where perpetual DEX trading doubles and Hyperliquid grows to about 30% market share, the annual buyback could surge to about $33.4 billion. Using the same 8.5x cap/buyback ratio, HYPE’s price may range from $80 to $90.

Bull Market Scenario

In an optimistic setting where trading volume triples and Hyperliquid captures around 40% market share, the annual buyback would skyrocket to around $66.8 billion. With a consistent 8.5x multiplier, HYPE could peak between $160 and $180, showcasing the potential for substantial token appreciation.

Why Hyperliquid Captures Investor Attention

Hyperliquid’s model captivates investors due to its direct and transparent cash flow into HYPE buybacks. With the perpetual DEX sector gaining ground against traditional exchanges, Hyperliquid leads in revenue and buybacks. Additionally, the HyperEVM offers more utility, increasing demand for HYPE through diverse applications that utilize its gas fees.

In essence, Hyperliquid offers a clear narrative — a DEX with immense liquidity channeling nearly all profits back into its ecosystem. This model provides clarity and confidence in its growth prospects, making it a compelling choice for those interested in the future of decentralized finance.

Concluding Thoughts

Hyperliquid’s strategy isn’t just about hyping the narrative but demonstrating tangible benefits and growth through its robust model. With billions already generated in trading volume and an aggressive buyback model, Hyperliquid stands out as a frontrunner in the perpetual DEX landscape.

FAQs

What makes Hyperliquid unique compared to other DEXs?

Hyperliquid’s unique approach lies in its aggressive buyback mechanism, where 97% of exchange fees are used to repurchase its native HYPE token, offering direct benefits to token holders and aligning growth with token value.

How does HyperEVM enhance the Hyperliquid ecosystem?

HyperEVM introduces an additional layer of demand for HYPE through its role as the platform for gas fees, where a portion of these fees are burned, enhancing token scarcity and value.

What potential price scenarios have been projected for HYPE?

Depending on market conditions, HYPE’s price could range from $45 in bearish conditions to $180 or more during a bullish market, based on current trading volume and market share assumptions.

How is Hyperliquid aligning its tokenomics with revenue growth?

By routing nearly all of its transaction fees back into buying its token, Hyperliquid creates a self-sustaining model that boosts token value as trading volume and fee revenue increase.

What role does market share play in Hyperliquid’s strategy?

Maintaining and expanding market share is crucial for Hyperliquid, as it directly impacts trading volumes and subsequent buyback capabilities, aligning with its strategy to enhance token value.

Over the past 24 hours, the crypto market has shown strong momentum across multiple dimensions. The mainstream discussion has focused on Coinbase's official entry into the prediction market through the acquisition of The Clearing Company, as well as the intense controversy within the AAVE community regarding token incentives and governance rights.

In terms of ecosystem development, Solana has introduced the innovative Kora fee layer aimed at reducing user transaction costs; meanwhile, the Perp DEX competition has intensified, with the showdown between Hyperliquid and Lighter sparking widespread community discussion on the future of decentralized derivatives.

I. Mainstream Topics

1. Coinbase Acquires The Clearing Company, Officially Entering Prediction Market

This week, Coinbase announced the acquisition of The Clearing Company, marking another significant move to deepen its presence in this field after last week's announcement of launching a prediction market on its platform.

The Clearing Company's founder, Toni Gemayel, and the team will join Coinbase to jointly drive the development of the prediction market business.

Coinbase's Product Lead, Shan Aggarwal, stated that the growth of the prediction market is still in its early stages and predicts that 2026 will be the breakout year for this field.

The community has reacted positively to this, generally believing that Coinbase's entry will bring significant traffic and compliance advantages to the prediction market. However, this has also sparked discussions about the industry's competitive landscape.

Jai Bhavnani, Founder of Rivalry, commented that for startups, if their product model proves to be successful, industry giants like Coinbase have ample reason to replicate it.

This serves as a reminder to all entrepreneurs in the crypto space that they must build significant moats to withstand competition pressure from these giants.

2. Kalshi Launches Kalshi Research and Integrates BSC Network

Regulated prediction market platform Kalshi launched its research arm, Kalshi Research, this week, aimed at opening its internal data to the academic community and researchers to facilitate exploration of prediction market-related topics.

Its inaugural research report highlights Kalshi's outperformance in predicting inflation compared to Wall Street's traditional models. Kalshi co-founder Luana Lopes Lara commented that the power of prediction markets lies in the valuable data they generate, and it is now time to better utilize this data.

Meanwhile, Kalshi announced its support for the BNB Chain (BSC), allowing users to deposit and withdraw BNB and USDT via the BSC network.

This move is seen as a significant step for Kalshi to open its platform to a broader crypto user base, aiming to unlock access to the world's largest prediction market. Furthermore, Kalshi also revealed plans to host the first Prediction Market Summit in 2026 to further drive industry engagement and development.

3. AAVE Token Incentive Controversy Persists as Founders and Whales Increase Holdings Against the Market Trend

The AAVE community recently engaged in heated debates around an Aave Improvement Proposal (AIP) titled "AAVE Tokenomics Alignment Phase One - Ownership Governance," aiming to transfer ownership and control of the Aave brand from Aave Labs to Aave DAO.

Aave founder Stani Kulechov publicly stated his intention to vote against the proposal, believing it oversimplifies the complex legal and operational structure, potentially slowing down the development process of core products like Aave V4.

The community's reaction was polarized. Some criticized Stani for adopting a "double standard" in governance and questioned whether his team had siphoned off protocol revenue, while others supported his cautious stance, arguing that significant governance changes require more thorough discussion.

This controversy highlights the tension between the ideal of DAO governance in DeFi projects and the actual power held by core development teams.

Despite governance disputes putting pressure on the AAVE token price, on-chain data shows that Stani Kulechov himself has purchased millions of dollars' worth of AAVE in the past few hours.

Simultaneously, a whale address, 0xDDC4, which had been quiet for 6 months, once again spent 500 ETH (approximately $1.53 million) to purchase 9,629 AAVE tokens. Data indicates that this whale has accumulated nearly 40,000 AAVE over the past year but is currently in an unrealized loss position.

The founder and whale's increased holdings during market volatility were interpreted by some investors as a confidence signal in AAVE's long-term value.

4. Top Articles: DeFi Curators and Ethereum Annual Summary

In this week's top article, Morpho Labs' "Curator Explained" detailed the role of "curators" in DeFi.

The article likened curators to asset managers in traditional finance, who design, deploy, and manage on-chain vaults, providing users with a one-click diversified investment portfolio.

Unlike traditional fund managers, DeFi curators execute strategies automatically through non-custodial smart contracts, allowing users to maintain full control of their assets. The article offered a new perspective on the specialization and risk management in the DeFi space.

Another widely circulated article, "Ethereum 2025: From Experiment to Global Infrastructure," provided a comprehensive summary of Ethereum's development over the past year. The article noted that 2025 is a crucial year for Ethereum's transition from an experimental project to global financial infrastructure. Through the Pectra and Fusaka hard forks, Ethereum achieved significant reductions in account abstraction and transaction costs.

Furthermore, the SEC's clarification of Ethereum's "non-securities" nature and the launch of tokenized funds on the Ethereum mainnet by traditional financial giants like JPMorgan marked Ethereum's gaining recognition from mainstream institutions. The article suggested that whether it is the continued growth of DeFi, the thriving L2 ecosystem, or the integration with the AI field, Ethereum's vision as the "world computer" is gradually becoming a reality.

II. Mainstream Ecosystem Updates

1. Solana: Launches Kora Fee Layer and propAMM Data Research

The Solana Foundation engineering team released a fee layer solution called Kora this week.

Kora is a fee relayer and signatory node designed to provide the Solana ecosystem with a more flexible transaction fee payment method. Through Kora, users will be able to achieve gas-free transactions or choose to pay network fees using any stablecoin or SPL token. This innovation is seen as an important step in lowering the barrier of entry for new users and improving Solana network's availability.

Additionally, a deep research report on propAMM (proactive market maker) sparked community interest. The report's data analysis of propAMMs on Solana like HumidiFi indicated that Solana has achieved, or even surpassed, the level of transaction execution quality in traditional finance (TradFi) markets.

For example, on the SOL-USDC trading pair, HumidiFi is able to provide a highly competitive spread for large trades (0.4-1.6 bps), which is already better than the trading slippage of some mid-cap stocks in traditional markets.

Research suggests that propAMM is making the vision of the "Internet Capital Market" a reality, with Solana emerging as the prime venue for all of this to happen.

2. Perp DEX: Hyperliquid vs. Lighter Competition Intensifies

The competition in the perpetual contract DEX (Perp DEX) space is becoming increasingly heated.

In its latest official article, Hyperliquid has positioned its emerging competitor, Lighter, alongside centralized exchanges like Binance, referring to it as a platform utilizing a centralized sequencer. Hyperliquid emphasizes its transparency advantage of being "fully on-chain, operated by a validator network, and with no hidden state."

The community widely interprets this as Hyperliquid declaring "war" on Lighter. The technical differences between the two platforms have also become a focal point of discussion: Hyperliquid focuses on ultimate on-chain transparency, while Lighter emphasizes achieving "verifiable execution" through zero-knowledge proofs to provide users with a Central Limit Order Book (CLOB)-like trading experience.

This battle over the future direction of decentralized derivatives exchanges is expected to peak in 2026.

Meanwhile, discussions about Lighter's trading fees have surfaced. Some users have pointed out that Lighter charged as much as 81 basis points (0.81%) for a $2 million USD/JPY forex trade, far exceeding the near-zero spreads of traditional forex brokers.

Some argue that Lighter does not follow a B-book model that bets against market makers, instead anchoring its prices to the TradFi market, and the high fees may be related to the current liquidity or market maker balance incentives. Providing a more competitive spread for real-world assets (RWA) in the highly volatile crypto market is a key issue Lighter will need to address in the future.

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Key Market Insights from December 19th, How Much Did You Miss Out?

1. On-chain Funds: $572.8M USD flowed into Arbitrum today; $459.1M USD flowed out of Hyperliquid 2. Largest Price Swings: $FTN, $DREAM 3. Top News: Base App fully opens with over 12,000 new users on the first day, setting a new daily record

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