I must admit, when I first came across Hyperliquid @HyperliquidX, I was skeptical. I thought of projects like dYdX, which rapidly expanded their user base through airdrops, but lost momentum over time. I started to think Hyperliquid would be the same, with users leaving after receiving their rewards. But Hyperliquid taught me a hard lesson. Even after the incentive program ended, Hyperliquid's popularity continued to soar. Its community transitioned from being incentive-driven to genuinely supporting the product. The moniker 'on-chain Binance'—it is becoming a reality.
This 'product-first, token-later' model is also novel and may stem from the founder's experiences with FTX. Jeff's philosophy for Hyperliquid has always been community-first. From product design to operations, his approach prioritizes user experience, aiming to provide genuine value to the community. This mindset resonates with the customer-centric principle advocated by Amazon founder Bezos. Bezos once said, 'Leaders start with the customer and work backward.'
This community-first innovative spirit defines Hyperliquid's unique operating model, especially regarding its funding and token distribution methods. Unlike most projects, Hyperliquid completely avoids external financing and builds and operates using only internal resources. Therefore, no HYPE tokens were allocated to private investors, centralized exchanges, or market makers—this is a deliberate move aimed at ensuring all participants can equally access HYPE.
By rejecting private investments, Hyperliquid reserved 70% of the total HYPE supply for the community. The team also implemented strict checks to ensure fair distribution, targeting sybil accounts attempting to manipulate the system. Approximately 27,000 wallets were flagged and penalized for fraudulent activity, increasing rewards for legitimate users. In the end, 274 million HYPE tokens (31% of the total supply) were distributed through airdrops to about 94,000 early users. As of December 2, 2024, the average value of these tokens was $26,000 per user. The airdrop process was designed to be user-friendly, with tokens automatically distributed once users agreed to the terms. However, users who failed to agree during the airdrop period missed out on rewards, leading to some discontent within the community.
Hyperliquid's unique approach is also reflected in how it utilizes trading fees. Unlike most exchanges that view fees as revenue, Hyperliquid reinvests them back into the community and its token holders. Fees generated from spot trading are used to burn HYPE, with a total of 245,000 HYPE burned as of December 9, 2024. Additionally, a portion of the revenue from trading fees has been used to buy back HYPE. As a result, the Hyperliquid team currently holds approximately 10 million HYPE in its assistance fund, valued at around $124 million as of December 5, 2024. Once a specific threshold is exceeded, additional buybacks and burns will occur to ensure the token's value remains stable and aligned with community interests.
The fees not used for HYPE buybacks or burns will be distributed to liquidity providers through Hyperliquid. Participants in the vault can earn a portion of the trading fees as well as profits generated from the HLP market-making strategy. The monthly return rate for the HLP Vault is approximately 1.78%, which corresponds to an impressive 24% annualized return rate. This structure creates a virtuous cycle that attracts external liquidity to the platform, thereby strengthening Hyperliquid's ecosystem.
Hyperliquid's excellent user experience further reflects the team's focus on user-centric design. By eliminating gas fees and achieving instant trade settlement, Hyperliquid replicates the liquidity and speed of CEX on-chain. These features address the main pain points users face when trading on-chain. Additionally, the platform's one-click interface and intuitive UI are optimized for both desktop and mobile environments, making it easier for users to trade. The commitment to usability has become one of Hyperliquid's defining features that sets it apart in the market.
Hyperliquid's futures trading volume continues to trend upward, with a trading volume of $443 billion year-to-date in 2024. The trading volume in November alone reached a new high of $77 billion, capturing an impressive 45% market share in the crypto futures DEX market. This figure far exceeds competitors like Jupiter, SynFutures, and dYdX.
Hyperliquid's strong user base is another testament to its success. As of November 30, 2024, the platform has accumulated over 200,000 users, with 10,000 new users joining within two days of the TGE launch. Over the course of seven days, the platform recorded 24,000 active traders, accounting for approximately 60% of the total market share in the futures DEX market—far surpassing competitors like Jupiter and dYdX.
Hyperliquid has earned the nickname 'on-chain Binance,' reflecting its significant position in the market. However, this label only scratches the surface of Hyperliquid's true ambitions. Hyperliquid is not just a trading platform; it aims to become the central hub for on-chain finance. To achieve this goal, it has developed a two-pillar architecture: Hyperliquid L1 and HyperEVM. This architecture combines trading speeds comparable to traditional financial systems with a universal smart contract environment, laying the groundwork for a paradigm shift in on-chain trading.
Technology can be replicated, but ideas cannot. More scalable blockchains are always out of reach; technology is crucial for crypto but is never enough. Hyperliquid understands this better than most. It builds its moat not just on fleeting technological advantages but on a steadfast commitment to the community.
From the very beginning, Hyperliquid has challenged the norms of the crypto space. First, it injected new life into a market that had been overvalued due to venture capital and retail investor sell-offs. By refusing to take the old path, it redefined how projects are launched and developed, making retail users first-class citizens. Second, it raised the bar for product quality by offering a seamless, tech-powered platform that sets new industry standards. Third, its airdrop campaign was not just a marketing success—it became a case study on how to execute community-first token distributions.
This is just the beginning of Hyperliquid's journey. As the ecosystem expands around HyperEVM, its true potential will be revealed, unlocking new use cases and innovations. The transformation of traditional finance through the Hyperliquid ecosystem signals a future worth watching closely.
#Crypto #Hyperliquid
