This article is from: Thor Hartvigsen
Compiled by: Azuma (@azuma_eth), Odaily Planet Daily
Background
Since the launch of HYPE, Hyperliquid's trading volume and revenue have seen substantial growth.
HYPE officially launched on November 29, with an opening price around $2, experiencing a significant increase in December, before recently retracting (down about 34% from its historical peak).
What are the next steps for HYPE and Hyperliquid?
This article will delve into the fundamentals of Hyperliquid and HYPE, exploring the bullish expectations for HYPE and analyzing potential valuation in conjunction with trading volume and revenue growth trends for 2025.
Trading Volume Data
While some expect that trading volume on Hyperliquid will decrease after the HYPE airdrop (which has historically happened on other derivative exchanges), the opposite has proven to be true. Since then, Hyperliquid's trading volume has significantly increased, frequently setting new daily trading volume highs exceeding $10 billion.
HYPE airdrops account for 31% of the total supply. An additional 42.81% of the supply is expected to be available for future distribution and community rewards. While it is foreseeable that some portion of the remaining share will be used for staking incentives and HyperEVM Layer1 ecosystem incentives, the possibility of future traders and HYPE holders unknowingly receiving some form of reward is not zero.
At a price of $25, 42.81% of the HYPE supply amounts to approximately $11 billion.
Since the launch of HYPE, in addition to contract trading volume, Hyperliquid's spot trading volume has significantly increased, with most trading days seeing volumes of $250 million to $500 million.
Hyperliquid vs CEX
For a long time, I have been tracking the trading volume comparisons between Hyperliquid and centralized exchanges (CEX) like Binance.
Over time, more users and trading volume have begun to shift on-chain, and Hyperliquid's bullish expectations involve market share growth. Compared to Binance, Hyperliquid clearly has a long way to go. However, as shown in the chart below, Hyperliquid's market share showed a notable upward trend in December. Over the past two weeks, Hyperliquid's relative market share has been around 5-8%.
According to Coingecko data, Binance's recent daily derivatives trading volume ranges between $60 billion and $150 billion. However, these trading volume figures cannot be verified from the CEX side, so caution is advised.
Compared 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, the fee for market orders is 0.035%, while for limit orders, it is 0.01%. 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 buybacks), and some miscellaneous addresses on Hyperliquid. The Hyperliquid team has not disclosed specific information regarding the distribution of platform trading fees, making it difficult to accurately estimate HYPE's buyback data.
Spot Trading
Users pay transaction fees in the spot market to purchase and burn the specific tokens traded. Unsurprisingly, HYPE currently accounts for a large proportion of Hyperliquid's spot trading volume. So far, HYPE's spot trading fees have exceeded 100,000 HYPE (equivalent to over $2 million at current prices).
Overall, compared to the buybacks from the assistance fund, this has no substantial impact on HYPE's supply (at least not at the moment).
Spot Auctions
Hyperliquid has also generated significant revenue from spot auctions. Based on $500,000 per auction, Hyperliquid could earn an additional $141.29 million annually.
Assistance Fund and HYPE Buyback
While the details of revenue distribution from spot auctions and contract trading are unclear, we can gauge daily HYPE buyback data through the assistance fund.
Two weeks ago, I published an analytical article on X, analyzing the HYPE buyback situation from the assistance fund over a 48-hour period. At that time, approximately 151,000 HYPE were bought back, equivalent to an annual buyback strength of about $686 million.
During those two days, Hyperliquid's average daily trading volume reached $8 billion.
Valuation Framework
Entering 2025, the bullish expectation for HYPE is 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 buyback efforts for HYPE.
One key reason for the continuous growth of Hyperliquid's trading volume is that it still has billions of dollars available for future rewards, making Hyperliquid a very profitable trading venue. Other potential catalysts include spot listings on CEX and the launch of HyperEVM.
@fmoulin7 provided a good analysis of HYPE's potential valuation, assuming a price-to-earnings (P/E) ratio of 30, with corresponding HYPE price expectations under different scales of contract trading fee income and auction income.
Hyperliquid's average daily trading volume over the past 14 days was approximately $4.89 billion, with auction prices around $500,000.
In light of this, we have projected Hyperliquid's annual revenue to be $587.5 million, assuming a price-to-earnings ratio of 30, which implies that HYPE could reach $52.78. Note that this calculation is based on circulating market capitalization rather than FDV, as future unlocks are mostly related to community incentives rather than internal group unlocks.
Additionally, two points are worth noting: as of now, nearly all of this revenue will be used for HYPE buybacks; more and more 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 be bullish on HYPE over a longer time frame.