Whether it's on-chain derivatives, the DeFi space, or decentralized exchanges (DEX), these fields are already overcrowded, with competition becoming suffocating. Hyperliquid, which opened just half a month ago, has ignited industry-wide attention and trends with its actual K-line charts, skyrocketing from $2 to $29 in a short time, attracting countless followers.
What is the logic behind this? Is it a simple technological innovation frenzy, or is there some deeper driving force hidden? Let's set aside all arrogance and prejudice, and dig deep into why this platform can rapidly become a focus, and whether it will become the next meme token manufacturing machine.
What is Hyperliquid? What makes it different?
Hyperliquid is a decentralized perpetual contract trading platform. Compared to the familiar GMX and dYdX, it is not just another 'alternative.' It brings technological and model disruptions, addressing common pain points in DEX: slow trading speeds, high fees, and poor transparency. Its advantages are even more pronounced in derivative trading.
Here are its core features:
Decentralized order book perpetual contracts
Hyperliquid has abandoned the traditional DEX AMM (Automated Market Maker) model and instead adopted an order book model—more akin to traditional market trading. This method not only has high trading efficiency but also ensures accurate matching.
Self-developed high-performance L1 chain
Unlike platforms like GMX and dYdX that rely on Ethereum and Arbitrum, Hyperliquid has its own independently developed high-performance L1 public chain. It is designed for low latency and high-frequency trading, ensuring that every transaction can be completed instantly with almost no delay, truly achieving 'fast and stable'.
Zero gas fees
Hyperliquid has eliminated gas fees entirely. For DeFi users, this improvement is revolutionary. You can trade without limits, without worrying about losing money due to gas fees.
Full-chain transparency
Every transaction is recorded on-chain, publicly transparent, and fully verifiable. This not only enhances trust but also eliminates black-box operations, providing users with a sense of security.
Innovative smart vault mechanism
Hyperliquid allows users to create personal 'vaults' and permits other users to deposit funds into these vaults to copy the trading strategies of the vault owners. In simple terms, the vault mechanism is like 'expert-led trading', and experts can also earn 10% of the profits.
To summarize the advantages of Hyperliquid:
Fast speed, low fees: Self-developed L1 chain and zero gas fees make trading more convenient and provide an excellent experience.
High transparency: All trading data is public, eliminating black-box operations.
Innovative and flexible: In addition to supporting perpetual contracts, it also offers advanced features like take profit and stop loss (TP/SL), and time-weighted average price (TWAP) to meet the needs of advanced traders.
Dutch auction: A new gameplay for meme launches
Hyperliquid's meme launch mechanism—Dutch Auction—provides a new path for the resurgence of memes.
What is a Dutch auction? Simply put, a Dutch auction is a type of 'reverse auction': starting at a high price and gradually decreasing over time until someone places a bid. In Hyperliquid, a 'listing spot' is auctioned every 31 hours, and the price for this spot is determined by the bidding, with the starting price typically being double that of the previous round.
Why is this appealing for memes? Because of scarcity! There is only one spot available every 31 hours, making it a great opportunity for any small-cap project or active community to gain exposure and engage in competition. Even obscure small tokens have the chance to ignite market interest through Dutch auctions, as long as the community enthusiasm is high and the ticker name is eye-catching.
Taking recent auctions as an example, the price for a spot has skyrocketed to 100 WU (about $100,000), and that's just the beginning. It is precisely this scarcity and competitive mechanism that encourages more projects to spend money for a chance to 'break out'. Small-cap meme coins can attract attention through this bidding approach and leap into the industry's spotlight.
Ultra-fast capital influx: The star-making factory of market hot money
From January to December, the cumulative trading volume of Hyperliquid skyrocketed from $14 billion to $82 billion, increasing by more than 50 times. The number of users also grew from 25,000 to 244,000, nearly a tenfold increase.
The speed and scale of this capital inflow has a direct impact:
Liquidity explosion: The influx of large amounts of capital continually increases trading depth and market enthusiasm, providing fertile ground for the development of memes.
Small-cap projects explode: After small projects obtain listing spots through Dutch auctions, they can quickly leverage the platform's popularity to gain attention and rapidly accumulate funds and expand their community.
Hyperliquid now acts like a meme token manufacturing machine, bringing 'small but beautiful' projects to a larger stage.
How to participate in Hyperliquid?
Method One: Directly participate in spot projects (meme coins)
Hyperliquid has already launched a large number of meme projects. Some of these projects usually have low market caps but an active community atmosphere. If you prefer lower risk, you can choose to participate in these spot projects and look for potential projects driven by hot money.
Method Two: Participate in Dutch auctions to seize internal opportunities
If you have a higher risk appetite, you can use your own research strategy to choose related memes to bid in the Dutch auction, which occurs every 31 hours. If successful, your tokens will gain trading support and community exposure from Hyperliquid.
Risks and Recommendations
Market risk: Participating in Hyperliquid auctions means you might encounter some 'shitty coins' with low market caps and average community activity. Some tokens may face issues like pump and dump, and there is even a risk of project failure. Particularly when auction fees rise to 100 WU, many small projects may not have enough funds to bear the listing costs, making the quality of the projects less guaranteed.
Liquidity risk: Because the listing spots on the platform are limited and there is only one opportunity every 31 hours, small projects with low liquidity may experience extreme price fluctuations.
Participation logic: Some project teams may obtain spots through lower auction fees and then use 'pump' techniques to increase prices, leading to higher fees and trading volumes. However, if the project lacks strong market support or substantial value, it may lead to a collapse or 'Rug Pull' (exit scam).
Recommendations: For beginners or users with smaller funds, it is advised to participate in Dutch auctions with caution. You can first pay attention to some existing active meme projects, observing their market performance and community dynamics. When deciding whether to participate in an auction, you should have enough understanding and judgment, avoiding blind following due to market hype.
Don't blindly follow the crowd, stay calm
Hyperliquid is undoubtedly a shining new star in the DeFi space. Its unique Dutch auction mechanism, lightning-fast trading experience, zero gas fees, and decentralized transparency have quickly attracted a large amount of capital and users, making it the focus of market attention. As a 'manufacturing machine' for meme tokens, it is not just a trend of new gameplay but also a market reaction stemming from a full understanding of the platform's functions and mechanisms.
However, the influx of hot money does not mean that all projects are worth blindly following. Especially in the face of such a complex market environment, it is essential to maintain a clear mind. The market is always right, and only with a full understanding of the platform, project, and market risks can you make rational decisions. The so-called 'listing fee' auctions, high-quality shells, and the explosion of low market cap projects may be tempting, but the hidden risks are far greater than we imagine.
Do not be deceived by so-called 'beautiful narratives' and avoid blind FOMO (fear of missing out); it is essential to have clear judgment and understand the underlying logic behind each operation.
