There is no doubt that Hyperliquid is the hottest focus in the recent crypto market. Through an airdrop that shocked the industry, it not only attracted great attention in the decentralized exchange (DEX) track, but also pushed its native token $HYPE to a jaw-dropping valuation. However, what risks are hidden behind this carnival? Can Hyperliquid stand out from the heat and move towards real value creation? Let's analyze it from the beginning.
Hyperliquid’s Airdrop: Value Creation or Short-Term Hype?
The Hyperliquid team initially earmarked 310 million HYPE for the airdrop, with more than 94,000 addresses eligible. So far, according to ASXN data, 87% (270.94 million) of the tokens have been successfully claimed, with a total book value of $7.6 billion. This figure officially broke the record of the $UNI airdrop launched by Uniswap in September 2020.
Price performance: Short-term surge
Since the airdrop, $HYPE has risen from an initial $3.81 to the current $25, an increase of over 5 times. This has brought $HYPE's circulating market cap to $8.4 billion, with a fully diluted valuation (FDV) as high as $25.2 billion, only 11% lower than the peak market cap of the $UNI airdrop.
Comparison with Uniswap airdrop
Book value comparison: At the market peak in May 2021, the airdrop book value of Uniswap reached $6.4 billion, while the current value of Hyperliquid's $HYPE airdrop has exceeded $1 billion.
Differences in participation scope and distribution:
$UNI airdrop covered over 250,000 addresses, of which nearly 94% received only 400 UNI, valued at around $6,500 at the time.
The $HYPE airdrop is more concentrated, with about 12% of recipients receiving between 5,000 and 10,000 tokens, valued at $140,000 to $280,000; 4.3% of recipients received over 10,000 tokens, while 57% received a maximum of 100 tokens (about $2,800).
Whale-level distribution and market impact
The $UNI airdrop once granted over 250 addresses up to 250,000 UNI (valued at $4 million at that time). A similar distribution model also appeared in the $HYPE airdrop, but with a greater market impact in a shorter time. Less than three weeks after the airdrop ended, the price of $HYPE surged from $3.81 to $28, achieving nearly a 6-fold increase, with its circulating market cap exceeding $9 billion at its peak, and a fully diluted market cap (FDV) nearly $30 billion.
Market behavior and selling pressure after the airdrop
Although the early performance of $HYPE is impressive, market data indicates that some airdrop recipients have already chosen to take profits, potentially leading to selling pressure in the short term:
According to ASXN data, of the top 500 addresses that received airdrops, 182 addresses have completely liquidated their holdings, with some addresses netting profits between $1.95 million and $2.8 million.
58 addresses (11%) have increased their holdings since the airdrop, indicating that some investors have confidence in the long-term potential of $HYPE, but the overall trend leans toward short-term arbitrage.
Additionally, the total locked value (TVL) of Hyperliquid has grown to $1.9 billion, ranking just after Arbitrum and ahead of Sui. However, whether this growth can be sustained still requires observation of the market's further recognition of $HYPE and the Hyperliquid ecosystem.
Compared to the data after the Uniswap airdrop, $HYPE may repeat a similar fate: within two years of the $UNI airdrop, 93% of recipients sold all their tokens, with only 1% increasing their holdings. This short-term arbitrage behavior may become a significant driver of price fluctuations after the Hyperliquid airdrop.
The latest collaborations and ecological expansion of Hyperliquid
After attracting attention with the airdrop, Hyperliquid is actively building its ecosystem, most notably through its collaboration with Solv Protocol.
The addition of Solv Protocol
Solv Protocol is a mature DeFi project with a total locked value (TVL) exceeding $3 billion and 500,000 users. Solv chose to debut on the Hyperliquid platform, a decision that not only indicates Solv's recognition of Hyperliquid's ecological potential but also brings more diversification to Hyperliquid's asset portfolio.
The significant importance of collaboration:
Enhancing ecological appeal: By introducing projects with technical backgrounds like Solv, Hyperliquid is no longer solely reliant on $HYPE and memecoins but is beginning to attract more practically valuable assets, forming a more solid ecosystem.
User expansion: Solv's debut attracted significant attention, bringing more high-quality user traffic and community support to Hyperliquid.
Feasible alternatives to decentralized exchanges: Hyperliquid, through partnerships with established projects, demonstrates that DEX platforms can not only be places for speculative tokens but also robust trading environments similar to CEXs.
Hyperliquid aims to become a fully on-chain exchange, positioned similarly to 'Binance on-chain'. However, achieving this goal requires attracting more quality projects and stable liquidity support. The addition of Solv undoubtedly lays a solid foundation for Hyperliquid.
Valuation analysis: Warning signs of high valuations
Although Hyperliquid has demonstrated great potential in technological innovation and ecological layout, from a valuation perspective, its token $HYPE may currently be overvalued, posing risks of short-term pullbacks.
Comparison with CEX
Binance: As the world's largest cryptocurrency exchange, Binance has a market cap of about $100 billion and has accumulated a wide user base, product line, and market influence over 7 years of development. In contrast, Hyperliquid, as a newly launched DEX, is valued only about 3 times lower than Binance, but its user scale and ecological depth cannot be compared to Binance.
Medium CEXs like Bybit: Similar medium exchanges, which have valuations comparable to Hyperliquid, reflect the speculative market sentiment present in the valuation of $HYPE.
Why would I consider reducing my holdings in $HYPE?
1. Sustainability of trading volume growth is in doubt
Although Hyperliquid's recent trading volume reached $13 billion, with estimated annual revenue from fees of $710 million, this growth may be driven more by short-term speculation, lacking support from a long-term user base. High trading volume may not be sustainable, especially as competition in the DEX market intensifies.
2. Overly optimistic revenue growth expectations
Listing fee risks: The $500,000 listing fee may cause project parties to turn to other lower-cost competitive platforms, affecting revenue growth expectations.
Dependency on fees: A decline in trading volume or user migration will directly threaten the sustainability of fee income, as the current valuation relies on this single source of income, posing high risks.
3. Misleading price-to-earnings metrics
The price-to-earnings ratio calculated based on this month's revenue is less than 10 times, but it overlooks the facts of market bull-bear cycles, revenue fluctuations, and the platform not having undergone a complete cycle. Compared to mature platforms like Binance, Hyperliquid's revenue and profits lack long-term validation.
4. Selling pressure: As more airdrop recipients choose to take profits, the price of $HYPE may face significant pullback pressure.
5. Potential pullback risks at high valuations
$HYPE currently has a circulating market cap of $8.4 billion, with an FDV of up to $25.2 billion, close to Uniswap's historical highs. Compared to the mature market of Binance, its valuation appears disproportionate, indicating overvaluation and clear pullback pressure.
Conclusion and recommendations
The $HYPE airdrop from Hyperliquid has indeed set new records in crypto history, demonstrating the potential for ecological building through collaborations with projects like Solv Protocol. However, the current market enthusiasm may obscure the true risks of valuation. In terms of circulating market cap and fully diluted valuation, the price of $HYPE is already close to or even exceeding levels of some established exchanges and DEXs, while the platform has yet to accumulate sufficient user base and trading data to support this high valuation.
For potential investors, the risks and rewards of $HYPE in the short term are asymmetric, and the market may experience a round of corrections. If you are optimistic about Hyperliquid's long-term development, it is advisable to patiently wait for market cooling and price adjustments. Investment should return to rationality, avoiding blind chasing in times of high market sentiment.
