Hyperliquid made history with the largest airdrop the crypto industry has ever seen – one that reshaped conversations around airdrop strategies. But there’s a lot more to this platform than just the HYPE.
If you’ve only heard about the Hyperliquid token airdrop or price movements, this article is for you: what exactly is Hyperliquid? What problems is it solving in crypto?
There’s a lot to unpack, so buckle up! Builders, in particular, might find it an intriguing case worth studying.
Hyperliquid, a game-changer in crypto trading: Key takeaways
Hyperliquid is best known as an on-chain perpetual and spot exchange.
It operates on its own high-performance Layer-1 blockchain, purpose-built for superior on-chain execution.
Its decentralized exchange (DEX), currently dominating the derivatives market, is the primary use case of the L1 but this is bound to change.
HyperEVM, introducing smart contract functionality for ultra-fast DeFi applications, is growing the chain with more use cases.
Hyperliquid token airdrop was that event that attracted massive attention to the platform for its scale and the impact that followed.
Hyperliquid rethinks the traditional DEX model by building a platform with features typically seen only in centralized exchanges. What is behind the scenes that creates this unique experience? Let’s explore.
What is Hyperliquid?
Hyperliquid is a decentralized trading platform built on its own high-performance blockchain.
The team behind it originally started in 2020 as Chameleon Trading, a successful crypto market-making firm, led by Jeff Yan (better known as Jeff.hl on crypto X).
In 2022, they set out to bring their trading expertise to DeFi. Instead of relying on existing blockchains with scalability issues, they developed their own Layer-1 that supports a fully on-chain orderbook, launching Hyperliquid in 2023.
Hyperliquid has grown rapidly. By February 2025, it is the largest perpetual DEX in crypto, dominating the market with 71% of monthly perps trading volume. Its closest competitor, Jupiter, one of the largest Solana dApps, holds 9.5%.
Source: Artemis Terminal
Hyperliquid continues to push boundaries of what’s possible in decentralized finance, now building a whole DeFi environment with:
- Derivatives and Spot exchange;
- Hyperliquid L1 blockchain;
- HyperEVM;
- HYPE token.
Source: Hyper Foundation
Let’s look into these key components in detail.
Hyperliquid derivatives DEX
Hyperliquid's first and core product was its perpetual DEX, launched in 2023. The idea was to create a decentralized exchange that looks, feels, and operates like a CEX but with transparency, no KYC policy, and user control of decentralization.
Source: Hyperliquid DEX
On-chain Central Limit Order Book (CLOB)
Hyperliquid uses a fully on‑chain order book, unlike many DEXs that rely on simple automated market makers (AMMs). This model comes with certain benefits:
- Lower slippage: Orders are matched directly at user-set prices;
- CEX-like trading features: Supports perpetual futures, high leverage, cross-margin trading, and order types like market, limit, stop-loss, and scale orders;
- Transparency: Every order and trade is recorded on-chain.
As a side effect, it also reduces toxic arbitrage risks since there are no AMM pricing inefficiencies to exploit.
Liquidity and vaults
Hyperliquid features vaults where users can pool their funds. There are two types of them: the protocol vault (HLP) and user-created vaults.
Source: Hyperliquid App
User vaults are usually created by experienced traders or entities. They effectively enable copy-trading: depositors' profits or losses depend on the trading strategies of the vault leader.
HLP (Hyperliquidity Provider) is a Hyperliquid-managed vault that works as a market-making and liquidation mechanism. It plays a critical role in the platform’s market structure:
- When a trader opens a position, the vault can take the opposite side of the trade, ensuring enough liquidity;
- It accumulates the platform’s fees, including revenue from trading, funding, and liquidations, and distributes them back to users.
This setup is similar to Vault systems on other DEXs (e.g. GMX’s GLP), but there’s a key difference. HLP runs an active market-making strategy, adjusting it dynamically based on market conditions. However, the exact trading mechanisms behind it are not openly shared.
Hyperliquid’s spot exchange
Hyperliquid expanded into spot trading in April 2024. Unlike traditional spot exchanges, Hyperliquid’s spot DEX has unique listing standards and liquidity solutions.
- Only tokens that comply with Hyperliquid’s HIP-1 standard can be traded;
- New tokens are introduced through a public auction system, where developers bid to launch their projects, including memecoins.
Newly listed tokens often struggle with liquidity. Hyperliquid solves this with HIP-2, an automated liquidity system that provides ready buyers and sellers.
Source: Hyperliquid App
Although it currently supports only native tokens, the HIP-1 standard potentially allows for future cross-chain integrations. This means Hyperliquid’s spot DEX might expand to support tokens from other ecosystems.
Hyperliquid DEX fees
Hyperliquid offers zero gas fees for trading on its platform. Standard trading fees still apply: maker fees up to 0.01% and taker fees around 0.035%, depending on the user’s trading volumes.
Source: Hyperliquid Docs
Its revenue‑sharing mechanism via the HLP vault means traders can actually earn a share of the fees. Interestingly, Hyperliquid retains no fees as profit.
Hyperliquid blockchain
Hyperliquid aims to deliver a user experience of top centralized platforms like Binance or Coinbase, but fully decentralized and non-custodial. This means their blockchain should allow for:
- Instant trade execution;
- No delays in liquidations & orders;
- Allow high-frequency trading (HFT) strategies on-chain.
A big part of that is low latency and high throughput. This aspect is powered by Hyperliquid’s HyperBFT consensus mechanism.
HyperBFT
Initially built on Tendermint, a widely used Byzantine Fault Tolerant (BFT) consensus mechanism that powers many blockchains in the Cosmos ecosystem, Hyperliquid later transitioned to HyperBFT. This was needed to support growing trading volumes.
HyperBFT is based on the HotStuff protocol, which operates under an asynchronous BFT model that works well in high-performance blockchains like Aptos and Sui.
Advantages of HyperBFT:
- Continuous sequencing of transactions: the network processes transactions without waiting for the completion of the current block's execution;
- Ultra-low latency: typically under one second;
- Massive throughput: Up to 200,000 orders per second, with the potential to scale even more.
What makes Hyperliquid L1 unique?
The blockchain features more mechanisms removing inefficiencies common in traditional DeFi:
Built-in financial primitives: Different from blockchains like Ethereum, where DeFi applications are built as separate smart contracts, Hyperliquid integrates key financial primitives directly into the protocol.
Seamless bridging: The native custom bridge is directly integrated into the blockchain. Traders onboard liquidity from Arbitrum, no complicated bridging steps, and start trading.
Essentially, the blockchain is precisely designed to serve Hyperliquid’s high-performance trading ecosystem.
HyperEVM
HyperEVM is a big upgrade for Hyperliquid, launched just days ago, on February 18, 2025. Before, Hyperliquid was mainly an AppChain – designed for its own DEX.
Now, it becomes a programmable blockchain where anyone can deploy smart contracts and launch EVM-compatible financial applications.
If you're interested in how projects like Hyperliquid leverage custom blockchain infrastructure for DeFi, check out our deep dive into AppChains.
How HyperEVM works
Hyperliquid directly integrates EVM blocks into the L1 state so HyperEVM is secured by the same consensus. This means that smart contracts and DeFi apps on HyperEVM get the same high speed as its core system. This is not the only benefit, though.
It integrates more features that can make it a DeFi super chain:
Composability with native financial primitives: dApps can use Hyperliquid’s native order books and trading mechanics directly and interact with L1 functionalities;
Ethereum compatibility: Hyperliquid’s EVM supports the latest Ethereum improvements and existing tools;
Digital asset launches: The innovation enables permissionless deployment of HIP-1 and HIP-2 on the mainnet, where native assets can also be deployed as standard ERC‑20 tokens on the HyperEVM;
Expanding HYPE token utility: The native token HYPE will work both on the L1 and the EVM, serving as a gas token for the EVM side.
Some key tools are still under development, but, as of now, early movers are already building and launching new products.
HYPE token
On November 29, 2024, Hyperliquid officially launched its token, HYPE. The native asset launch now enables staking with 16 trusted validators. Although critics have highlighted issues with a limited number of validators, the team shared plans to increase the number as the network matures
As part of the launch, Hyperliquid conducted a massive airdrop and instantly set a new standard for what a true DeFi-first token launch looks like.
Hyperliquid airdrop
HYPE token airdrop was a game-changing event that got the entire DeFi space talking. Here’s why:
- 310 million HYPE tokens (worth $1.2 billion at launch) went directly to 90,000+ users. This is 31% of the supply, much higher than typical airdrops.
- Hyperliquid platform took no venture capital funding and was fully bootstrapped by the founding team. This means Hyperliquid didn’t reserve coin shares for VCs and gave the tokens straight to the community.
- Part of Hyperliquid's trading fees are apparently used to buy back HYPE, potentially supporting the asset's value.
As a result, instead of quick sell-offs, which often crash airdrop tokens, HYPE surged in value and volumes have sustained. At launch, the initial token price was $3.90, now sitting at around $25.
HYPE price post-airdrop / Source: VanEck
The positive effect of the airdrop is also supported by increased user engagement metrics:
Source: Hyperliquid Stats
The platform got over 170,000 new users, doubling the user base acquired prior to the airdrop.
How to buy Hyperliquid?
Users can buy and trade HYPE token directly on Hyperliquid. Before starting, make sure you have USDC on the Arbitrum network and ETH for a small gas fee. Then, follow these steps:
- Deposit USDC via Arbitrum: Connect your Arbitrum-compatible wallet (e.g. MetaMask) to Hyperliquid DEX. Select the ‘Deposit’ button, and follow the prompts.
- Transfer USDC to spot account: Funds arrive almost instantly. Once your USDC is in your Hyperliquid account, it might appear in your Perpetuals account. Move funds to your spot account.
- Place your order: Use the HYPE/USDC trading pair to buy or sell HYPE tokens.
Source: Hyperliquid Spot DEX
Additionally, HYPE is available on several centralized exchanges like KuCoin, Bitget, and Gate.io.
Conclusion: Why Hyperliquid is succeeding
Hyperliquid’s success seems to come down to one thing: continuously building – on-chain finance, performant chain, a ton of throughput and bandwidth, now open for everyone who wants to build on top of it. The team consistently delivers products without relying on external funding, keeping full focus on their vision.
With new developments on the horizon, it is poised for even greater adoption. Expect new financial products to be launched or launch your own.
If you're looking to deploy your own blockchain nodes or need robust infrastructure, GetBlock can help. Let’s connect and create something impactful!
