I still remember that afternoon, someone said to me, friend, do you want to know about Hyperliquid’s bidding mechanism?
I will explain the HIP-1 proposal proposed by @HyperliquidX in a (super) simple way.
"What is this?"
HIP-1 is a token standard that basically defines the rules for how tokens can be listed on Hyperliquid. It uses a Dutch auction method to sell tokens, and each auction lasts 31 hours, with the starting price being twice the previous transaction price.
"I'm a little confused, can you please keep it simple?"
Hyperliquid is a blockchain platform, similar to an L1 chain with its own exchange.
On this platform, users can trade various perpetual contracts, long or short almost all tokens, and use leverage. Moreover, it also has a spot trading area, like Binance or Coinbase, but it is completely decentralized, which means that there is no single company controlling it.
“I think I understand, but how do you achieve it?”
Because Hyperliquid is decentralized, it needs a fair way to decide which tokens can be listed, rather than letting a team or individual decide arbitrarily. Unlike centralized exchanges, which usually decide to list by charging fees or selecting tokens themselves.
"How do I do it specifically?"
Hyperliquid uses auctions to decide which tokens can be listed.
Simply put, every 31 hours, a new "listing right" will be auctioned. The starting price is twice the last transaction price, and then the price will gradually decrease until someone is willing to buy it.
"Can you give me an example?"
Let’s say you want to get your “XYZ” token listed on Hyperliquid.
You can’t contact the team directly to request listing. Instead, you need to participate in an auction and buy a “listing right”.
"How much does it cost?"
First, you need to check the price at which the last “listing right” was traded, let’s say it was $69,420.
Then the starting price of the next auction will be twice that, which is $138,840.
After that, the price will slowly drop over time until someone decides to buy it. This auction process will repeat every 31 hours.
“So I can list my token too?”
Yes, anyone can participate in the auction. If you think the price is right, you can purchase the “listing rights” to have your token listed on Hyperliquid.
The 31-hour interval is intended to prevent the platform from listing too many tokens, thereby maintaining scarcity on the platform and uniqueness of the tokens.
To summarize:
Hyperliquid’s auction mechanism determines the price at which new tokens are listed on spot exchanges.
Each auction has a time and price limit - an auction will be held every 31 hours, with the starting price being twice the previous transaction price, and then the price will gradually decrease until someone buys it.
