Article reprinted from: Odaily Planet Daily

This article is from: Thor Hartvigsen

Compiled by: Azuma (@azuma_eth), Odaily Planet Daily

Background

Since the launch of HYPE, both trading volume and revenue on Hyperliquid have seen substantial growth.

HYPE officially launched on November 29, with an opening price of around 2 dollars, experiencing a significant rise in December, only recently experiencing a retreat (down about 34% from the historical peak).

What are the next steps for HYPE and Hyperliquid?

This article will analyze the fundamentals of Hyperliquid and HYPE in depth, exploring the upward expectations for HYPE and analyzing potential valuations in conjunction with trading volume and revenue growth trends for 2025.

Trading volume data

While some expect that trading volume on Hyperliquid will decline after the HYPE airdrop (a situation seen with other derivative exchanges historically), the reality has been quite the opposite. Since then, trading volume on Hyperliquid has significantly increased, repeatedly setting new daily trading volume highs exceeding 10 billion dollars.

The HYPE airdrop accounts for 31% of the total supply. An estimated 42.81% of the supply is still available for future distribution and community rewards. While it can be anticipated that part of the remaining share will be used for staking incentives and HyperEVM Layer1 ecosystem incentives, the possibility of future traders and HYPE holders receiving some form of rewards again, unknowingly, is not zero.

At a price of 25 dollars, 42.81% of the HYPE supply is equivalent to about 11 billion dollars.

Since the launch of HYPE, Hyperliquid's spot trading volume has also significantly increased, with most trading days seeing volumes of 250-500 million dollars.

Hyperliquid vs CEX

For a long time, I have been tracking the comparison of trading volumes between Hyperliquid and centralized exchanges (CEX) like Binance.

Over time, more and more users and trading volume have started to shift on-chain, and Hyperliquid's bullish expectations involve market share growth. Compared to Binance, it is clear that there is still a long way to go. However, as shown in the chart below, Hyperliquid's market share has shown a significant upward trend in December. Over the past two weeks, Hyperliquid's relative market share has been around 5-8%.

According to data from Coingecko, Binance's recent daily derivative trading volume ranges from 60 billion to 150 billion dollars. However, these trading volume figures cannot be verified from the CEX side, so caution is warranted.

Relative to Bybit, Hyperliquid's market share recently reached as high as 25% of the latter (peak data).

Fees and revenue

Contract trading

The fees on Hyperliquid are paid by trading users on the platform. Compared to other exchanges like Binance, Hyperliquid's fees are lower, aimed at incentivizing more trading activity. For perpetual contract trading, most users pay a fee of 0.035% for market orders and 0.01% for limit orders. The larger the trading volume, the lower the fees.

These fees are collected by the HLP market-making vault, insurance fund, assistance fund (primarily responsible for repurchase), and some miscellaneous addresses on Hyperliquid. The Hyperliquid team has not publicly disclosed the specific allocation of platform trading fees, making it difficult to accurately estimate HYPE's repurchase data.

Spot trading

Users pay transaction fees on the spot market to buy and burn the specific tokens being traded. Unsurprisingly, HYPE currently accounts for the majority of Hyperliquid's spot trading volume. So far, the spot trading fees for HYPE have exceeded 100,000 HYPE (which translates to over 2 million dollars at current prices).

Overall, compared to the repurchase by the assistance fund, this has no substantial impact on the supply of HYPE (at least not at the moment).

Spot auction

Hyperliquid has also gained significant revenue from spot auctions. Based on 500,000 dollars per auction, Hyperliquid can expect an additional 141.29 million dollars in revenue each year.

Assistance fund and HYPE repurchase

While the details of the income distribution from spot auctions and contract trading are unclear, we can measure the daily HYPE repurchase data through the assistance fund.

Two weeks ago, I published an analytical article on X, analyzing the HYPE repurchase situation of the assistance fund within 48 hours. At that time, about 151,000 HYPE were repurchased within 48 hours, equivalent to an annual repurchase volume of approximately 686 million dollars.

During those two days, Hyperliquid's average daily trading volume reached 8 billion dollars.

Valuation framework

Entering 2025, the upward expectations for HYPE are a bet on the continued growth of Hyperliquid's trading volume and the ongoing demand for spot auctions, as this will lead to increased revenue for Hyperliquid, thereby amplifying the repurchase strength of HYPE.

One key reason for the continuous growth in Hyperliquid's trading volume is that Hyperliquid still has billions of dollars available for future rewards, making it a very profitable trading venue. Other potential catalysts include the listing of spot trading on CEX and the launch of HyperEVM.

@fmoulin7 provided a good analysis of HYPE's potential valuation, assuming a price-to-earnings ratio (P/E) of 30, with the expected HYPE prices corresponding to different scales of contract trading fee income and auction revenue as follows.

Hyperliquid's average daily trading volume over the past 14 days has been approximately 4.89 billion dollars, with auction prices around 500,000 dollars.

In light of this, we have derived an expected annual revenue for Hyperliquid of 587.5 million dollars, assuming a price-to-earnings ratio of 30, which means HYPE could reach 52.78 dollars. Please note that this calculation is based on circulating market capitalization rather than FDV, as most future unlocks are related to community incentives rather than internal group unlocks.

Additionally, there are two points worth noting: up to now, these revenues have almost all been used to repurchase HYPE; an increasing amount of HYPE has been staked (currently about 25%), effectively reducing the liquid supply.

In summary, if you believe that Hyperliquid's trading volume and adoption will continue to grow, there are many reasons to maintain a bullish outlook on HYPE over a longer timeline.