The Future of Hyperliquid in the Perpetual DEX Market

By: crypto insight|2025/11/21 10:00:12

Key Takeaways:

Hyperliquid has established itself as a leading player in the perpetual decentralized exchange (DEX) market, with a daily trading volume reaching billions and an annualized revenue exceeding $1.3 billion.
A unique feature of Hyperliquid is its aggressive token buyback model, where 97% of all fees are used to repurchase its native token, HYPE, contributing substantially to its price stability and growth.
The system’s sustainability hinges on its ability to capture increasing trading volumes and maintain its 97% buyback policy amid varying market conditions.
Hyperliquid’s ecosystem includes innovations like HyperEVM, which integrates HYPE for gas fees, further enhancing its deflationary model and token utility.

Exploring Hyperliquid’s Market Position and Future Potential

Hyperliquid stands as a dominant force in the perpetual DEX space, known for leveraging its unique economic model to capitalize on growing trading volumes. At its core, the platform converts transaction fees into a systematic buyback of its HYPE token, driving value for stakeholders. The ongoing debate focuses on how Hyperliquid can maintain its momentum and enhance its market presence.

A Snapshot of Hyperliquid’s Operations

Hyperliquid has achieved remarkable figures with daily trading volumes surpassing $80 billion and an annualized revenue of over $12 billion (as of 2025). This volume translates into significant cash flow, virtually all of which fuels the HYPE token’s buyback strategy. Hyperliquid’s treasury actively uses 97% of fee revenues to repurchase HYPE on the open market, establishing a robust support mechanism for its token price.

The vital aspect of Hyperliquid’s strategy is the constant creation of buying pressure on HYPE through these buybacks. This approach not only stabilizes the token but also presents potentially lucrative investment opportunities by aligning token value with exchange growth.

The Core Mechanism: Tokenomics Reinvented

Central to Hyperliquid’s appeal is its straightforward yet aggressive financial design. Traders on the platform pay fees that contribute to a constantly running buyback fund, which dedicates about 97% of all exchange fees to purchasing HYPE tokens. As trading volume increases, this fund’s activity intensifies, pushing more demand onto HYPE itself.

Additionally, HyperEVM, Hyperliquid’s innovative blockchain layer, uses HYPE for gas fees. Following a deflationary path similar to Ethereum’s EIP-1559 model, base fees are partly burned, further reducing the circulating supply and adding value to HYPE. This dual-engine approach ensures that every transaction within Hyperliquid’s ecosystem indirectly benefits HYPE holders.

Strategic Scenario Exploration

In terms of scenarios, varying market conditions could impact Hyperliquid’s trajectory:

Bear Market Scenario: Even with moderate growth, if Hyperliquid’s market share remains stable, HYPE could see a valuation between $40 and $50, assuming perpetual DEX traffic increases by 1.5 times.
Base Case Scenario: Should on-chain trading volume double and Hyperliquid’s market share rise to 30%, HYPE’s value could climb to $80–90.
Bull Market Scenario: A much more optimistic projection sees Hyperliquid’s platform dominance boosting HYPE’s price to the $160–180 range, driven by a threefold increase in trading volume and a 40% market share.

Why Hyperliquid Commands Attention

Investors find Hyperliquid’s financial architecture compelling due to the real, visible cash flow it generates. The transparency of its cash allocation towards HYPE buybacks and its simplified economic design offer a pure form of decentralized trading revenue distribution. The continuous growth in decentralized on-chain contracts further strengthens Hyperliquid’s market position.

Furthermore, the potential expansion of HyperEVM’s applications could significantly enhance token consumption and fee-channel efficacy, adding another layer to the company’s growth framework.

Final Reflections

Hyperliquid’s success narrative isn’t merely about capitalizing on digital trends but rather about leveraging strategic financial engineering. It blends perpetual DEX growth with a liquidity-rich model, supported by immense trading volumes and a token system that constantly cycles profits back into the ecosystem through buybacks.

The ultimate bullish stance on HYPE derives from a well-oiled perpetual DEX operation combined with a Level 1 block chain that generates profound market liquidity and depth, underpinned by a model that mechanically reinvests its profits back into the community.

Frequently Asked Questions (FAQ)

What makes Hyperliquid different from other decentralized exchanges?

Hyperliquid distinguishes itself through its unique economic model, where 97% of trading fees are used for HYPE token buybacks, exerting continuous buying pressure and enhancing token value stability. Additionally, its integration of HyperEVM offers further utility and deflationary mechanisms through the use of HYPE as gas fees.

How does the buyback mechanism impact HYPE’s value?

The buyback mechanism creates a perpetual demand for HYPE by reinvesting the majority of trading fees into token repurchases. This demand can potentially reduce volatility and support price appreciation, aligning token value with increased platform usage and revenue generation.

What role does HyperEVM play in Hyperliquid’s growth strategy?

HyperEVM acts as an additional growth engine, utilizing HYPE for gas fees and creating another channel for fee-based demand. Its deflationary feature, through fee burning, further decreases HYPE’s supply, thus potentially increasing its value over time.

How sustainable is the 97% buyback policy?

The sustainability of the 97% buyback policy largely depends on Hyperliquid’s ability to maintain and grow its trading volumes. As long as market participation and revenue continue to rise, the buyback policy can remain effective in supporting HYPE’s market performance.

Is HYPE a good investment opportunity?

HYPE presents a promising investment opportunity for those bullish on the continued growth of decentralized perpetual contracts and Hyperliquid’s ability to capture more market share. However, investing always involves risks, and potential investors should consider market dynamics and conduct their due diligence.

Over the past 24 hours, the crypto market has shown strong momentum across multiple dimensions. The mainstream discussion has focused on Coinbase's official entry into the prediction market through the acquisition of The Clearing Company, as well as the intense controversy within the AAVE community regarding token incentives and governance rights.

In terms of ecosystem development, Solana has introduced the innovative Kora fee layer aimed at reducing user transaction costs; meanwhile, the Perp DEX competition has intensified, with the showdown between Hyperliquid and Lighter sparking widespread community discussion on the future of decentralized derivatives.

I. Mainstream Topics

1. Coinbase Acquires The Clearing Company, Officially Entering Prediction Market

This week, Coinbase announced the acquisition of The Clearing Company, marking another significant move to deepen its presence in this field after last week's announcement of launching a prediction market on its platform.

The Clearing Company's founder, Toni Gemayel, and the team will join Coinbase to jointly drive the development of the prediction market business.

Coinbase's Product Lead, Shan Aggarwal, stated that the growth of the prediction market is still in its early stages and predicts that 2026 will be the breakout year for this field.

The community has reacted positively to this, generally believing that Coinbase's entry will bring significant traffic and compliance advantages to the prediction market. However, this has also sparked discussions about the industry's competitive landscape.

Jai Bhavnani, Founder of Rivalry, commented that for startups, if their product model proves to be successful, industry giants like Coinbase have ample reason to replicate it.

This serves as a reminder to all entrepreneurs in the crypto space that they must build significant moats to withstand competition pressure from these giants.

2. Kalshi Launches Kalshi Research and Integrates BSC Network

Regulated prediction market platform Kalshi launched its research arm, Kalshi Research, this week, aimed at opening its internal data to the academic community and researchers to facilitate exploration of prediction market-related topics.

Its inaugural research report highlights Kalshi's outperformance in predicting inflation compared to Wall Street's traditional models. Kalshi co-founder Luana Lopes Lara commented that the power of prediction markets lies in the valuable data they generate, and it is now time to better utilize this data.

Meanwhile, Kalshi announced its support for the BNB Chain (BSC), allowing users to deposit and withdraw BNB and USDT via the BSC network.

This move is seen as a significant step for Kalshi to open its platform to a broader crypto user base, aiming to unlock access to the world's largest prediction market. Furthermore, Kalshi also revealed plans to host the first Prediction Market Summit in 2026 to further drive industry engagement and development.

3. AAVE Token Incentive Controversy Persists as Founders and Whales Increase Holdings Against the Market Trend

The AAVE community recently engaged in heated debates around an Aave Improvement Proposal (AIP) titled "AAVE Tokenomics Alignment Phase One - Ownership Governance," aiming to transfer ownership and control of the Aave brand from Aave Labs to Aave DAO.

Aave founder Stani Kulechov publicly stated his intention to vote against the proposal, believing it oversimplifies the complex legal and operational structure, potentially slowing down the development process of core products like Aave V4.

The community's reaction was polarized. Some criticized Stani for adopting a "double standard" in governance and questioned whether his team had siphoned off protocol revenue, while others supported his cautious stance, arguing that significant governance changes require more thorough discussion.

This controversy highlights the tension between the ideal of DAO governance in DeFi projects and the actual power held by core development teams.

Despite governance disputes putting pressure on the AAVE token price, on-chain data shows that Stani Kulechov himself has purchased millions of dollars' worth of AAVE in the past few hours.

Simultaneously, a whale address, 0xDDC4, which had been quiet for 6 months, once again spent 500 ETH (approximately $1.53 million) to purchase 9,629 AAVE tokens. Data indicates that this whale has accumulated nearly 40,000 AAVE over the past year but is currently in an unrealized loss position.

The founder and whale's increased holdings during market volatility were interpreted by some investors as a confidence signal in AAVE's long-term value.

4. Top Articles: DeFi Curators and Ethereum Annual Summary

In this week's top article, Morpho Labs' "Curator Explained" detailed the role of "curators" in DeFi.

The article likened curators to asset managers in traditional finance, who design, deploy, and manage on-chain vaults, providing users with a one-click diversified investment portfolio.

Unlike traditional fund managers, DeFi curators execute strategies automatically through non-custodial smart contracts, allowing users to maintain full control of their assets. The article offered a new perspective on the specialization and risk management in the DeFi space.

Another widely circulated article, "Ethereum 2025: From Experiment to Global Infrastructure," provided a comprehensive summary of Ethereum's development over the past year. The article noted that 2025 is a crucial year for Ethereum's transition from an experimental project to global financial infrastructure. Through the Pectra and Fusaka hard forks, Ethereum achieved significant reductions in account abstraction and transaction costs.

Furthermore, the SEC's clarification of Ethereum's "non-securities" nature and the launch of tokenized funds on the Ethereum mainnet by traditional financial giants like JPMorgan marked Ethereum's gaining recognition from mainstream institutions. The article suggested that whether it is the continued growth of DeFi, the thriving L2 ecosystem, or the integration with the AI field, Ethereum's vision as the "world computer" is gradually becoming a reality.

II. Mainstream Ecosystem Updates

1. Solana: Launches Kora Fee Layer and propAMM Data Research

The Solana Foundation engineering team released a fee layer solution called Kora this week.

Kora is a fee relayer and signatory node designed to provide the Solana ecosystem with a more flexible transaction fee payment method. Through Kora, users will be able to achieve gas-free transactions or choose to pay network fees using any stablecoin or SPL token. This innovation is seen as an important step in lowering the barrier of entry for new users and improving Solana network's availability.

Additionally, a deep research report on propAMM (proactive market maker) sparked community interest. The report's data analysis of propAMMs on Solana like HumidiFi indicated that Solana has achieved, or even surpassed, the level of transaction execution quality in traditional finance (TradFi) markets.

For example, on the SOL-USDC trading pair, HumidiFi is able to provide a highly competitive spread for large trades (0.4-1.6 bps), which is already better than the trading slippage of some mid-cap stocks in traditional markets.

Research suggests that propAMM is making the vision of the "Internet Capital Market" a reality, with Solana emerging as the prime venue for all of this to happen.

2. Perp DEX: Hyperliquid vs. Lighter Competition Intensifies

The competition in the perpetual contract DEX (Perp DEX) space is becoming increasingly heated.

In its latest official article, Hyperliquid has positioned its emerging competitor, Lighter, alongside centralized exchanges like Binance, referring to it as a platform utilizing a centralized sequencer. Hyperliquid emphasizes its transparency advantage of being "fully on-chain, operated by a validator network, and with no hidden state."

The community widely interprets this as Hyperliquid declaring "war" on Lighter. The technical differences between the two platforms have also become a focal point of discussion: Hyperliquid focuses on ultimate on-chain transparency, while Lighter emphasizes achieving "verifiable execution" through zero-knowledge proofs to provide users with a Central Limit Order Book (CLOB)-like trading experience.

This battle over the future direction of decentralized derivatives exchanges is expected to peak in 2026.

Meanwhile, discussions about Lighter's trading fees have surfaced. Some users have pointed out that Lighter charged as much as 81 basis points (0.81%) for a $2 million USD/JPY forex trade, far exceeding the near-zero spreads of traditional forex brokers.

Some argue that Lighter does not follow a B-book model that bets against market makers, instead anchoring its prices to the TradFi market, and the high fees may be related to the current liquidity or market maker balance incentives. Providing a more competitive spread for real-world assets (RWA) in the highly volatile crypto market is a key issue Lighter will need to address in the future.

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Key Market Insights from December 19th, How Much Did You Miss Out?

1. On-chain Funds: $572.8M USD flowed into Arbitrum today; $459.1M USD flowed out of Hyperliquid 2. Largest Price Swings: $FTN, $DREAM 3. Top News: Base App fully opens with over 12,000 new users on the first day, setting a new daily record

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