Hyperliquid HYPE Explained
is Hyperliquid the next big thing, or another L1 destined to fade into obscurity?
Hyperliquid is the breakthrough layer-1 launched by Jeff Yan, a quantitative analyst from Hudson River Trading specializing in high-frequency trading.
Yan built one of the largest crypto market-making firms before leaving to work on Hyperliquid.
Yan’s approach to Hyperliquid is unique because he launched an app before layer 1.
This is the inverse crypto startup playbook.
Most founders launch a layer-1 first because raising hundreds of millions from VCs is much easier for infra than for an app.
Once the initial raise is complete, founders then use the money to fund engineers to build apps in their ecosystem.
However, as we've seen with countless layer-1 blockchains, this doesn't always work, and many never end up with apps anyone uses.
There’s a graveyard of layer-1 blockchains that never went from 0 - 1 while skating by on their massive runway, with few users ever using their platform.
This model often rewards a select few VCs with strong networks, who receive early allocations.
Usually, they're up 5x - 10x before retail investors ever have a chance to buy.
This unfair approach left a massive gap in the app layer of crypto because there’s much less incentive to launch an app as the runway is small and there is little margin for error.
With Hyperliquid, there were no early allocations to VCs who could dump on their community later.
A whopping 69.9% of its supply was allocated to the community, compared to an average of 36.1% for other networks.
Airdrops usually lead to a massive selloff, and the token never recovers. Magic Eden, Blur, and Bera are the most recent examples.
However, Hyperliquid is up almost 10x from its airdrop, and momentum seems to be building instead of fading.
The app is already one of the most used in crypto, recently generating $84.73M in revenue ($595M annualized).
Hyperliquids app first, no VC allocation approach, along with the biggest airdrop of all time, are the reasons you see so many people on X bull-posting it.
The airdrop was bigger than Uniswap ($500M) and dYdX ($1B); multiple people made well over seven figures for being an early adopter.
But does Hyperliquid have any staying power beyond the airdrop?
Or is it doomed to become the next L1 ghost chain that never ships anything meaningful?
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What is Hyperliquid?
Hyperliquid is a high-performance layer-1 blockchain with a fully on-chain order book derivatives exchange.
It combines the speed and liquidity of a CEX with the transparency and security of a DEX.
The launch of Hyperliquid is timely as it’s already captured a significant amount of mindshare at the very start of an accelerating trend.
More people are starting to prefer a DEX over a CEX like Coinbase.
In February 2025, DEXs accounted for roughly 20% of the total crypto trading volume, up almost 3x from 8% in early 2023.
Additionally, the TVL of DeFi protocols has surpassed $200B globally, showing an increased comfort with leaving assets on-chain over a CEX.
For the sake of comparison, let’s review how it stacks up against Binance.
Comparison: Hyperliquid vs. Binance
Hyperliquid already has a daily trading volume of $5B, compared to Binance’s $26B.
It has a blistering 200,000 TPS transaction speed compared to BNB chain’s 100,000 TPS. Fees are lower for Hyperliquid, and they don’t currently require KYC.
Hyperliquid has already captured 32.4% of crypto derivatives trading, hitting $77.7B in trading volume in December alone.
Hyperliquid generates income through platform fees ($24.5M/month) and token auctions ($2M/month), with annualized revenue expected to reach $527M in 2025, recently placing it just behind Ethereum and Solana.
All spots fees on Hyperliquid are used to buyback and burn $HYPE
Comparison: Hyperliquid vs. Binance Revenue
The $HYPE token powers the ecosystem, supporting governance, staking, and liquidity provisions.
You can also stake your $HYPE and earn rewards.
$HYPE Token Utility
The Hyperliquid ecosystem has seen significant growth, with several projects being developed on the platform before the launch of its layer-1.
Here’s a table showcasing some of the top projects in the ecosystem.
Apps in Hyperliquids Ecosystem
These projects showcase various applications growing within the ecosystem, from DeFi protocols to gaming and AI integrations.
New projects are being added constantly, showcasing the early potential for innovation.
What’s Next?
Hyperliquid has several upcoming catalysts for the ecosystem.
First off, HYPEREVM is set to launch sometime in Q1 2025, with more dApps joining the ecosystem every day.
Second, they are planning a season 2 airdrop, with an additional 38.88% to future emissions and community rewards, with a total of 76.2% going to the community.
Hyperliquid will also add spot BTC trading and a natively embedded multi-sig.
They’re also lightning-fast at adding new pairs, as evidenced by the listing of TRUMP and MELANIA.
The speed of listing new assets is crucial if they want to outcompete Coinbase and Binance, especially since Coinbase is currently struggling with user backlash.
Soon, Hyperliquid will also support liquid staking, allowing holders to earn additional yield.
Verdict
Hyperliquid continues to post impressive trading volume, with $479B in the last 3 months with an average daily volume of $5.3B.
Additionally, it demonstrates impressive price action in the most bearish conditions in crypto.
Hyperliquids unique approach and airdrop have bootstrapped an early, diehard community and revenue model that’s already competing with the top centralized exchanges in crypto.
Its FDV currently sits at $23.6B, while its market cap is at $7.8B.
This may seem high, but remember that only 30% of $HYPE is in circulation now.
Many think $HYPE could reach a $100B FDV in the near future, considering how much activity and attention it’s already captured.
By comparison, it already has more TVL than AVAX, which has been around much longer and doesn’t have as much activity.
One of the most relevant comparisons for Hyperliquid is Binance, as they took a similar approach to BNB, which sits at an FDV of $88B.
Can Hyperliquid catch BNB chain?
Time will tell.
The early numbers for Hyperliquid are impressive, and if it maintains this trajectory, it could very well be one of the top crypto projects when the market picks back up.
With the current altcoin bloodbath, more people will be looking for already successful protocols over ones that promise future success.