Author: Frank, PANews
Recently, the MEME coins on the Layer1 public chain Hyperliquid have attracted the attention of players. Its top-ranked project PURR has a market value of more than 110 million US dollars, which not only exceeds the MEME coins on most public chains, but also ranks among the top ten in the MEME ranking of the Solana chain. In addition to PURR, there are two other MEME coins on the Hyperliquid chain with a market value of more than 20 million US dollars.
The emergence of these potential projects makes people wonder whether this new generation of L1 is becoming a new MEME blue ocean market. But from Hyperliquid's perspective, MEME seems to be far from their real goal.
L1, a new startup, vows to build the fastest public chain in the entire network
It is not easy to understand the positioning of Hyperliquid at the first time. The homepage of its official website introduces: Hyperliquid is a decentralized perpetual exchange, while its documentation says: Hyperliquid is a high-performance L1 optimized from scratch. But this is not due to negligence, but about the two roles of Hyperliquid.
Hyperliquid founder Jeff Yan once founded Chameleon Trading, a cryptocurrency high-frequency trading company ranked in the top ten in terms of trading volume. Most of Hyperliquid's team members also came from Chameleon Trading. For a team with sufficient experience in high-frequency contract trading, Hyperliquid's starting point was not to build a public chain, but to "build a decentralized Binance."
Therefore, Hyperliquid's initial product was a decentralized perpetual exchange Hyperliquid. As the business volume increased, Hyperliquid believed that "the only way to build a scalable perps DEX is to build an L1 from scratch."
In response to the need for high-frequency transactions on the chain, Hyperliquid turned to L1 construction and classified DEX as the flagship product of this L1. Currently, the Hyperliquid L1 mainnet can support 100,000 orders per second. According to official introduction, this data is expected to increase to millions per second in the future. Even from the current rate, 100,000 TPS is still the fastest among all public chains.
"Most L1s build infrastructure and hope others will build killer apps. Hyperliquid takes the opposite approach: polish local applications first and then develop into general infrastructure." Jeff Yan explained Hyperliquid's route thinking on social media.
It has generated $35 million in revenue, and the market value of the points exceeds $200 million
Hyperliquid has not accepted any external funding, which the team said “allows the team to focus on building a product they believe in without external pressure.”
But the lack of financing does not mean that Hyperliquid has no airdrops to take advantage of. Since November 2023, the points program launched by Hyperliquid has attracted a large number of users to participate. The platform will issue a certain amount of points every week. The points are distributed according to the proportion of the user's trading volume. Users who obtain points can get rewards from the platform's revenue.
Data as of July 25, 2024 shows that Hyperliquid's Hyperliquidity Provider has generated a total of $34.94 million in revenue, mainly from providing liquidity, executing liquidations, and charging platform fees. Users can deposit funds into the liquidity pool to earn income.
This model is similar to the transaction mining that was popular in various exchanges a few years ago. However, from CEX to DEX, the idea of transaction mining is still popular in the community.
In addition to the official liquidity benefits, Hyperliquid also allows the creation of personal vaults. Any user can create a personal vault (similar to a private equity fund on a chain), and other users can choose whether to deposit funds based on past trading performance. The creator will receive 10% of the profits. Of course, this investment is also full of risks. Among the top 10 vaults in terms of TVL, 4 are in a loss state. However, this model of directly handing money to smarter people has attracted a lot of funds. A fund pool with an annualized return of 727% has attracted more than 1 million funds.
As of now, Hyperliquid has not issued an official governance token. Points have become a potential asset for platform revenue. Currently, the price of Hyperliquid points on whales.market is maintained at around $4.4. According to statistics from community members, a total of 51.06 million points will be issued. Based on this number, the market value of points has reached $224 million.
The MEME coin effect has not yet appeared
PURR is the first native token on Hyperliquid to implement the HIP-1 standard, a MEME coin with a cat image. The token did not have an initial sale, but 50% of the tokens were airdropped to users in proportion to their points held, and the remaining 50% were added to the PURR/USDC fund pool. (Subsequently, 40% of the tokens were destroyed at the suggestion of the community). As of July 25, PURR's market value was approximately $110 million, making it the token with the highest market value on Hyperliquid, and its price has risen by about 10 times since its issuance. The second largest token by market value is BIGBEN, which has a market value of approximately $28.5 million and is a MEME coin with Big Ben as the theme. It has risen by about 2 times since its opening.
HFUN is the token with the highest increase on Hyperliquid, with a market value of about 25 million US dollars and a maximum increase of more than 100 times. In addition, the market value of other native tokens on the Hyperliquid chain does not exceed 10 million US dollars.
As of July 25, 2024, there are not many native tokens on the Hyperliquid chain, with only 44 trading pairs. Most of them are MEME tokens. Hyperliquid's MEME coin is still not a mature track, and its 24-hour trading volume on the chain is about 10 million US dollars.
By giving back all its revenue to the community, Hyperliquid has also attracted more and more users to participate in platform transactions. According to DeFiLlama data, as of July 25, Hyperliquid's TVL was US$430 million, ranking fourth in the derivatives product category, second only to GMX, Jupiter, and DYDX. According to official data, Hyperliquid has 183,000 users and a 24-hour trading volume of US$1.5 billion.
But this does not seem to be Hyperliquid's goal. According to a report on Hyperliquid by Protecc Labs, Hyperliquid believes that its real competitors are not other derivatives exchanges, but Binance and Solana chains. The founder of Hyperliquid believes that "Solana and Binance have become giants in their respective fields and provide extremely attractive environments for their respective target audiences. Hyperliquid solves a huge problem on Solana, namely the on-chain order book and fragmented liquidity, which requires SOL as the fuel for transactions. At the same time, it also solves a huge problem for Binance, namely decentralization (access to the best products without strict KYC/AML)."
As far as this goal is concerned, Hyperliquid has a grand enough narrative, but whether this goal can be achieved still requires Hyperliquid to come up with more killer features.