Article source: Deep Tide TechFlow
Author: nairolf
Compiled by: Deep Tide TechFlow
'Friend, what is the bidding mechanism of Hyperliquid?'
Let's explain the HIP-1 proposal put forward by @HyperliquidX in a (super) simple way.
'What is this?'
HIP-1 is a standard for fungible tokens with a limited supply.
It defines the rules for how tokens are listed on the Hyperliquid platform. Tokens are sold through a Dutch auction, with each auction lasting 31 hours and the starting price being double the closing price of the previous auction.
'Don't understand?'
Hyperliquid is an L1 blockchain with its own exchange.
It supports various perpetual contract trades, allowing users to long or short almost any token and use leverage.
Additionally, it has a spot trading area similar to Binance or Coinbase, but it is completely decentralized, hoping this helps you understand.
'I understand, but how is it implemented?'
Because Hyperliquid is decentralized, there needs to be a fair mechanism to decide which tokens can be listed, rather than a single team or individual making arbitrary decisions. This is different from centralized exchanges, which usually decide listings by charging fees or selectively choosing tokens.
'How does it work specifically?'
Hyperliquid achieves token listing through an auction mechanism.
In simple terms, a new 'listing right' will be auctioned every 31 hours. The starting price of the auction is double the closing price of the last 'listing right', and over time, the price gradually decreases until someone purchases it.
'Give an example.'
Suppose you want to list your 'XYZ' token on Hyperliquid.
Simply contacting the team to request listing won't work. Instead, you need to purchase a 'listing right', which requires participating in the auction.
'So how much does it cost?'
The first step is to check the closing price of the last 'listing right', for example, $69,420.
The starting price for the next auction will be double that, which is $138,840.
This price will gradually decrease over time until someone decides to purchase it. After that, this auction process will repeat every 31 hours.
'So I can list my token?'
That's right. Anyone can participate in the auction, and if they feel the price is appropriate, they can purchase the 'listing rights' to have their token listed on Hyperliquid.
The 31-hour interval ensures that not too many tokens are listed, maintaining the scarcity of the platform and the uniqueness of the tokens.
Summary
The auction mechanism of Hyperliquid determines the price at which new tokens are listed on the spot exchange.
Each auction is subject to time and price limits—an auction occurs every 31 hours, starting at double the last closing price, and then the price gradually decreases until someone purchases it.