Thread by @Uncoilhype

HIP-3: The Future of Permissionless Perps on @HyperliquidX

Co - Authored by Uncoil x @hypurr_co

HIP-3 is @HyperliquidX most significant advancement to date: builder deployed perpetuals. For the first time, anyone will be able to create and manage their own perpetual markets directly onchain. This is more than a feature addition; it marks a clear transition for @HyperliquidX from a curated derivatives exchange into a broader infrastructure layer that enables permissionless global liquidity.

With HIP-3, markets such as equities, forex, commodities, prediction contracts, and even community driven assets can operate continuously on the same high performance system that already processes billions in daily crypto volume.

The process begins with a Dutch auction held every 31 hours, where builders bid $HYPE to secure the right to deploy a market. The winning bidder gains a deployment slot but is required to stake 1 million $HYPE, capital valued in the tens of millions at current prices. This stake remains slashable for seven days, even if an unstaking request has been initiated, ensuring accountability and discouraging manipulation.

Once deployed, the builder has full control over the market, including the ability to set fees, establish leverage limits, define settlement rules, and select the oracles that drive price discovery.

Flexibility extends beyond initial market creation. Deployers can use the Halt Trading function to cancel all open orders, settle positions at the current mark price, and recycle assets to relist dated contracts without re-entering the auction process. This design improves efficiency for structured rollouts but also introduces edge cases where halts could be misused during periods of heavy liquidation.

Oversight is provided by validators, who hold stake weighted authority to slash deployers for misconduct. The challenge lies in distinguishing between deliberate manipulation and operational errors, which will ultimately test the strength of this governance model.

HIP-3 introduces defined open interest caps to ensure market stability. Notional limits apply both across the entire DEX and at the level of individual assets, while size based limits are enforced per asset with a fixed ceiling of 1B units. Builders are required to calibrate size decimals so that each increment reflects a practical trade amount, typically in the range of $1–10 at the initial mark price.

These safeguards, combined with HyperCore’s multisig integration, establish clear boundaries that reduce the risk of reckless market behavior while preserving the openness of permissionless deployment.

HIP-3 opens the door to an exceptionally wide range of markets. This could include perpetuals on assets such as @Apple or @Microsoft trading around the clock, forex pairs like EUR/USD operating onchain, or commodity futures for oil and wheat integrated into the ecosystem.

Beyond replicating traditional financial instruments, HIP-3 also allows for new market structures such as community built indices, volatility products, pair trades, binary prediction markets, and even meme inspired instruments. As long as a reliable oracle can be defined, a market can exist. In this way, HIP-3 positions @HyperliquidX as a core infrastructure layer for open financial innovation.

The economic design of HIP-3 directly strengthens the protocol. Each new market requires 1M $HYPE to be locked, meaning that even a relatively small number of deployments removes a meaningful amount of supply from circulation. Deployers can capture up to 50% of the fees generated, while the remaining portion flows back to the protocol.

This structure establishes a self reinforcing cycle in which additional markets increase trading activity, generate more fees, and further drive demand for $HYPE, ultimately supporting continued deployments. In contrast to centralized exchanges that rely on opaque listing arrangements, @HyperliquidX framework is transparent, open, and designed to align incentives across all participants.

The opportunities presented by HIP-3 are significant, but the risks carry equal weight. Builder led vaults do not have access to @HyperliquidX global backstop, requiring deployers to bootstrap their own liquidity and exposing smaller markets to higher levels of systemic risk. The 31 hour auction cadence may generate strong activity initially, but if demand slows it could result in spam or lower quality deployments.

Governance led by validators adds another layer of complexity, as their decisions carry subjectivity that could undermine confidence if applied inconsistently. The long term success of HIP-3 will depend on whether its incentive structures and safeguards can maintain the right balance between openness and stability.

Momentum around HIP-3 is already visible. Several teams are steadily accumulating $HYPE in preparation for upcoming slots. @ventuals_ Protocol is also live on the HIP-3 testnet, positioning itself ahead of mainnet launch and actively preparing for the broader shift toward permissionless market creation on @HyperliquidX .

Around HIP-3, we can expect the development of aggregators, routing infrastructure, and unified frontends that connect builder led markets into a single cohesive layer. HIP-3 is not only about expanding the number of perpetual markets, it represents a broader effort to reimagine global finance on high performance onchain infrastructure.

If executed effectively, @HyperliquidX will move beyond competing with individual exchanges and establish itself as the core infrastructure for market creation.