The Hyperliquid Thesis
This is going to be a very long thread explaining why I am so bullish long-term on Hyperliquid, the Hyperliquid ecosystem and $HYPE, including some points which people might easily overlook.
This is going to be a very long thread explaining why I am so bullish long-term on Hyperliquid, the Hyperliquid ecosystem and $HYPE, including some points which people might easily overlook.
1. The Perp DEX
Hyperliquid has proven to be the only perp dex that can compete with CEX volumes and OI, and it completely dominates all other perp dexes in market share. We can attribute this dominance to a few main reasons:
- Best in class liquidity and execution. Other perp dexes struggle with illiquid orderbooks, limited asset selection, lack of advanced order types and occasional latency issues. Hyperliquid experienced these issues in its early stages, but managed to fix them quickly and has dominated ever since.
- Low fees relative to CEXes. Hyperliquid has the lowest fees (0.035% maker and 0.01% taker, decreases with more volume) for futures trading compared to all the major CEXes.
- Organic growth instead of mercenary capital. Hyperliquid usage actually rose after $HYPE TGE, in contrast with other perp dexes with metrics that fall off a cliff after they TGE.
Hyperliquid has proven to be the only perp dex that can compete with CEX volumes and OI, and it completely dominates all other perp dexes in market share. We can attribute this dominance to a few main reasons:
- Best in class liquidity and execution. Other perp dexes struggle with illiquid orderbooks, limited asset selection, lack of advanced order types and occasional latency issues. Hyperliquid experienced these issues in its early stages, but managed to fix them quickly and has dominated ever since.
- Low fees relative to CEXes. Hyperliquid has the lowest fees (0.035% maker and 0.01% taker, decreases with more volume) for futures trading compared to all the major CEXes.
- Organic growth instead of mercenary capital. Hyperliquid usage actually rose after $HYPE TGE, in contrast with other perp dexes with metrics that fall off a cliff after they TGE.
2. The Assistance Fund
Almost all trading fees from Hyperliquid go to the Assistance Fund (the rest go to HLP), which is used to buy $HYPE on the open market. The AF currently holds 5.2% of the circulating supply.
This allows revenue from the exchange to accrue directly to $HYPE holders. Almost all crypto projects have zero value accrual to the token (no one is buying tokens for governance purposes), but the Assistance Fund provides a floor for $HYPE by being a price-insensitive buyer.
We can construct valuation models for $HYPE based on this revenue which actually look undervalued by tradfi big tech standards - refer to this excellent post by @keisancrypto: x.com/Keisan_Crypto/…
Almost all trading fees from Hyperliquid go to the Assistance Fund (the rest go to HLP), which is used to buy $HYPE on the open market. The AF currently holds 5.2% of the circulating supply.
This allows revenue from the exchange to accrue directly to $HYPE holders. Almost all crypto projects have zero value accrual to the token (no one is buying tokens for governance purposes), but the Assistance Fund provides a floor for $HYPE by being a price-insensitive buyer.
We can construct valuation models for $HYPE based on this revenue which actually look undervalued by tradfi big tech standards - refer to this excellent post by @keisancrypto: x.com/Keisan_Crypto/…
3. No VCs
Hyperliquid Labs is entirely self-funded. The $HYPE TGE had zero allocations to market makers, private investors or CEXes. Core contributor tokens are locked until late November, and most vesting completes between 2027 and 2028.
VCs have to sell eventually as they have mandates to follow - in contrast, core contributors don't need to sell, especially if they're already rich and didn't need any external funding to build Hyperliquid.
Hyperliquid Labs is entirely self-funded. The $HYPE TGE had zero allocations to market makers, private investors or CEXes. Core contributor tokens are locked until late November, and most vesting completes between 2027 and 2028.
VCs have to sell eventually as they have mandates to follow - in contrast, core contributors don't need to sell, especially if they're already rich and didn't need any external funding to build Hyperliquid.
4. HyperCore + HyperEVM synergy
This is a very big one - no other blockchain is as well-equipped to be the onchain house of finance as Hyperliquid is with its unique design.
HyperCore consists of performant native components: perp and spot orderbooks, staking, oracles, multi-sig, etc. HyperEVM is a general purpose world-computer, allowing builders to deploy code that interacts with both HyperEVM and HyperCore. Together they form ONE composable state secured by HyperBFT consensus (i.e. no need for bridging, proofs, or trusted signers, in contrast to the Ethereum ecosystem)
Here's 2 examples of why this design is superior to every other option we currently have:
Example 1: Project ABC deploys a $ABC token contract on HyperEVM and a corresponding spot asset $ABC in the spot ticker auction on HyperCore. The HyperCore and HyperEVM token contracts can be easily linked, allowing users to transfer their $ABC balance to HyperCore for order book trading.
Compared to CEXes:
1) The entire process is permissionless, with no need to pay CEX listing fees.
2) There is no bridging risk between HyperCore and HyperEVM (they are ONE unified state!). In contrast, CEXs need to deposit and withdraw through wallets that could be hacked (like Bybit was for over $1B recently)
Example 2: A lending protocol accepts $HYPE as collateral and lends $USDC to the borrower. To determine the liquidation threshold, the lending smart contract can easily read $HYPE prices directly from the HyperCore order books using a "read precompile."
If the borrower's $HYPE position requires liquidation, the lending smart contract can liquidate the $HYPE collateral for $USDC on the HyperCore order books using a "write precompile." In contrast to AMM-based liquidations on all other chains (be it Ethereum, Solana etc), orderbook based liquidations offer far more efficient liquidations. Refer to this excellent post by @0xBroze to learn more about how these liquidations are a significant upgrade: x.com/0xBroze/status…
This is a very big one - no other blockchain is as well-equipped to be the onchain house of finance as Hyperliquid is with its unique design.
HyperCore consists of performant native components: perp and spot orderbooks, staking, oracles, multi-sig, etc. HyperEVM is a general purpose world-computer, allowing builders to deploy code that interacts with both HyperEVM and HyperCore. Together they form ONE composable state secured by HyperBFT consensus (i.e. no need for bridging, proofs, or trusted signers, in contrast to the Ethereum ecosystem)
Here's 2 examples of why this design is superior to every other option we currently have:
Example 1: Project ABC deploys a $ABC token contract on HyperEVM and a corresponding spot asset $ABC in the spot ticker auction on HyperCore. The HyperCore and HyperEVM token contracts can be easily linked, allowing users to transfer their $ABC balance to HyperCore for order book trading.
Compared to CEXes:
1) The entire process is permissionless, with no need to pay CEX listing fees.
2) There is no bridging risk between HyperCore and HyperEVM (they are ONE unified state!). In contrast, CEXs need to deposit and withdraw through wallets that could be hacked (like Bybit was for over $1B recently)
Example 2: A lending protocol accepts $HYPE as collateral and lends $USDC to the borrower. To determine the liquidation threshold, the lending smart contract can easily read $HYPE prices directly from the HyperCore order books using a "read precompile."
If the borrower's $HYPE position requires liquidation, the lending smart contract can liquidate the $HYPE collateral for $USDC on the HyperCore order books using a "write precompile." In contrast to AMM-based liquidations on all other chains (be it Ethereum, Solana etc), orderbook based liquidations offer far more efficient liquidations. Refer to this excellent post by @0xBroze to learn more about how these liquidations are a significant upgrade: x.com/0xBroze/status…
5. Builder codes
Builder codes are probably one of the most overlooked aspects of Hyperliquid. Some of you might have heard of @pvp_dot_trade - did you know they use builder codes?
Builder codes allow projects to use Hyperliquid's infrastructure and liquidity for zero cost. To make a web2 comparison, builder codes are like AWS but for liquidity.
Here's a great breakdown by @0xOmnia on the potential of builder codes: x.com/0xOmnia/status…
Builder codes are probably one of the most overlooked aspects of Hyperliquid. Some of you might have heard of @pvp_dot_trade - did you know they use builder codes?
Builder codes allow projects to use Hyperliquid's infrastructure and liquidity for zero cost. To make a web2 comparison, builder codes are like AWS but for liquidity.
Here's a great breakdown by @0xOmnia on the potential of builder codes: x.com/0xOmnia/status…
6. Spot token listings
Hyperliquid is the only perp dex which supports spot trading on majors (on BTC for now, with ETH and SOL coming soon). This is convenient for traders who wish to trade BTC without paying funding, or want a convenient way to farm basis (long spot BTC, short perp BTC) within one platform.
The only thing Hyperliquid is missing now compared to CEXes is the ability to use spot assets such as BTC or HYPE as margin instead of only USDC. However, since major CEXes offer this functionality, we can be quite confident that Hyperliquid will eventually include this feature.
Hyperliquid is the only perp dex which supports spot trading on majors (on BTC for now, with ETH and SOL coming soon). This is convenient for traders who wish to trade BTC without paying funding, or want a convenient way to farm basis (long spot BTC, short perp BTC) within one platform.
The only thing Hyperliquid is missing now compared to CEXes is the ability to use spot assets such as BTC or HYPE as margin instead of only USDC. However, since major CEXes offer this functionality, we can be quite confident that Hyperliquid will eventually include this feature.
7. Dedicated community and builders
Hyperliquid has developed one of the most dedicated (arguably fanatical) communities in crypto history. Of course, a significant amount of this enthusiasm can be attributed to $HYPE TGE being the largest airdrop in crypto history. However, many Hyperliquid believers have seen how this team is one of the few teams in crypto who actually focus on building a good product, not just extracting capital, and this is why many are so passionate about it.
There is also a vibrant builder community in Hyperliquid, and most projects are built natively on HyperCore or HyperEVM instead of being bridged over from other chains. Only a few are live on HyperEVM for now, since many features of the HyperEVM have not been released yet. However, once HyperEVM exits its "alpha" phase, we will see plenty of projects migrating from testnet to mainnet.
Hyperliquid is the next Solana, but better.
Hyperliquid has developed one of the most dedicated (arguably fanatical) communities in crypto history. Of course, a significant amount of this enthusiasm can be attributed to $HYPE TGE being the largest airdrop in crypto history. However, many Hyperliquid believers have seen how this team is one of the few teams in crypto who actually focus on building a good product, not just extracting capital, and this is why many are so passionate about it.
There is also a vibrant builder community in Hyperliquid, and most projects are built natively on HyperCore or HyperEVM instead of being bridged over from other chains. Only a few are live on HyperEVM for now, since many features of the HyperEVM have not been released yet. However, once HyperEVM exits its "alpha" phase, we will see plenty of projects migrating from testnet to mainnet.
Hyperliquid is the next Solana, but better.
Tagging some HL chads:
@GuthixHL
@Sakrexer
@crypto_adair
@Henrik_on_HL
@degennQuant
@0xRyomenSukuna
@derteil00
@NMTD8
@0xPasteke
@Shuri2060
@stevenyuntcap
@kirbyongeo
@fiege_max
@MetamateDaz
@GreenGeorgeHL
@SamuraiTakedown
@GuthixHL
@Sakrexer
@crypto_adair
@Henrik_on_HL
@degennQuant
@0xRyomenSukuna
@derteil00
@NMTD8
@0xPasteke
@Shuri2060
@stevenyuntcap
@kirbyongeo
@fiege_max
@MetamateDaz
@GreenGeorgeHL
@SamuraiTakedown
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