Hyperliquid: Riding the Perpetual DEX Wave

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

Key Takeaways:

Hyperliquid utilizes almost all its revenue to execute a robust HYPE token buyback program, aiming to maximize token value.
The automated “rescue fund” redirects 97% of fees for HYPE buyback, creating consistent upward pressure on the token price.
Hyperliquid envisages growth scenarios ranging from a bear market valuation of $45–50 to a bull market price of $160–180 per HYPE token.
The introduction of HyperEVM adds another dimension of demand and deflation for HYPE, enhancing its value proposition.

In the ever-shifting landscape of decentralized finance (DeFi), perpetual decentralized exchanges (DEXs) stand as a key player. Among them, Hyperliquid has established itself not just as a participant, but as a leader. It’s not only innovating with unique mechanisms but also drawing attention with its aggressive buyback approach. If decentralized perpetual contract trading is the future, Hyperliquid places itself firmly at the forefront.

Understanding Hyperliquid’s Position

Hyperliquid is making significant waves by transforming how revenue is allocated within a decentralized framework. Unlike its peers, which may reserve substantial fees for operations or development, Hyperliquid channels a staggering 97% of its fees towards buying back its HYPE tokens on the open market. This approach leads to sustained price support and potential appreciation of the token, aligning interests across the ecosystem.

How Hyperliquid Operates

Central to Hyperliquid’s success is its simple yet powerful fee structure. With a daily trading volume exceeding $80 billion (as of 2025), the platform accumulates a large treasury dedicated almost entirely to HYPE token buybacks. This aggressive buyback policy effectively decreases the circulating supply of the token while amplifying demand dynamics as volumes and transactions increase.

HyperEVM: A Second Growth Engine

HyperEVM, an EVM-compatible layer integrated with the Hyperliquid ecosystem, introduces an added dimension. On this platform, users pay transaction (gas) fees using HYPE, which are partly burned following a model similar to Ethereum’s EIP-1559. This mechanism further cements HYPE’s scarcity and value creation philosophy.

The Strategic Implications of HYPE Buybacks

The bullish outlook for Hyperliquid heavily depends on its strategic financial practices. By acting as a perpetual funnel for its own token, the platform creates consistent buying pressure, inherently designed to buoy the token price above and beyond simple speculative trading.

Scenario Projections

Scenario 1: Bear Market Outlook

If market conditions tighten yet perpetual DEX volumes rise, Hyperliquid aims to maintain its current market share, aligning the HYPE token with a market cap that implies a price bracket of $45 to $50. This scenario emphasizes resilience, suggesting that Hyperliquid is built to weather market downturns effectively.

Scenario 2: Baseline Growth

Under baseline assumptions, where on-chain perpetual contract trading volume doubles and Hyperliquid increases its market presence, the expected HYPE token price could range between $80 and $90. Here, an increase in users and market share translates to stronger token performance.

Scenario 3: Bullish Expansion

In a thriving bull market, with trading volumes tripling and Hyperliquid’s high availability becoming more dominant, projections place HYPE’s potential price between $160 and $180, excluding additional upside from broader market exuberance or brand-specific expansions like HyperEVM.

Why This Model Excites Investors

Hyperliquid’s framework is not just about current metrics but its potential for continued growth and market capture. With more decentralized applications and markets utilizing HyperEVM, the demand for block space and thus HYPE grows, aligning perfectly with the platform’s deflationary tokenomics.

For investors, it’s not only about past performances or current statistics but the logical rigor that Hyperliquid employs in its business model. Real cash flow supports market activities, giving weight to the optimistic outlook. Additionally, the foundational assumptions of buyback and token burn are concepts investors can readily understand and support, given their transparency and historical efficacy in retaining value.

Final Reflections

At its core, the Hyperliquid venture is about sustaining momentum. Central to this is the intertwined relationship between fee-derived revenue, market share expansion, and relentless buybacks, which together create a compelling narrative of growth. As digital financial markets develop, platforms like Hyperliquid, with their commitment to liquidity and token scarcity, position themselves to capture a mature, committed investor base eager to see these theories of perpetual buyback-influenced market ascendancy realized.

FAQ

Why is the buyback strategy central to Hyperliquid’s growth?

The buyback approach is crucial as it ensures that nearly all trading fee revenue is used to repurchase HYPE tokens, reducing supply and supporting market demand. This strategy creates a positive feedback loop that potentially increases the token’s value.

How does HyperEVM impact HYPE’s valuation?

HyperEVM introduces additional demand for HYPE through transaction fees paid on the platform. With mechanisms similar to Ethereum’s EIP-1559, part of these fees is burned, which intensifies the scarcity and desirability of the token.

What are the risks of investing in Hyperliquid?

The primary risk lies in whether the trading volume can be sustainably expanded and if the market will continue to value the buyback strategy. Shifts in market sentiment or technological integration challenges could affect this trajectory.

How does Hyperliquid compare to traditional centralized exchanges?

Hyperliquid offers ease of access and decentralized trust, unlike centralized exchanges. Its focus on transparency and community benefits via on-chain mechanisms differentiates it significantly, appealing to advocates of decentralization.

Could broader market changes disrupt Hyperliquid’s model?

While market changes can impact any financial instrument, Hyperliquid’s diversified token usage across ecosystems and perpetual buyback policy are designed to adapt to fluctuations, providing inherent resilience against market volatility.

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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