Hyperliquid is a crypto perpetual exchange that operates on its own layer 1 blockchain called HyperEVM. The platform offers perpetual futures trading for users. Its one of the few platforms that offers military grade level perp trading, which means users can place long and short order on crypto without having to hold any cryptocurrencies.
The protocol truly bridges the gap between centralized and decentralized exchanges The platform is designed to provide a seamless and efficient trading experience, addressing common issues like high latency and inefficient order matching found in traditional decentralized exchanges (DEXs).
In this article we will take you through how Hyperliquid works and how you can trade in HYPE tokens.
How Does Hyperliquid Work?
Hyperliquid blockchain is designed for crypto derivatives trading. The platform employs its proprietary HyperBFT consensus algorithm. The system ensures that trades, orders and liquidations occur in real-time, with all transactions transparently recorded onchain. It truly bridges the gap between cefi and defi.
A fully onchain perpetual order book exchange is a core feature of the platform. Unlike decentralized exchanges (DEXs) that rely on automated market makers (AMMs), Hyperliquid adopts a traditional order book system. This approach allows traders to place bids and asks for various assets, resembling the experience of centralized exchanges (CEXs).Hyperliquid has a decentralized clearing house that manages users’ margin balances and positions.
The exchange supports both cross-margin and isolated-margin trading. Cross-margin allows traders to distribute collateral across multiple positions, while isolated-margin dedicates specific collateral to each trade, reducing liquidation risks for other holdings. This system enhances traders’ flexibility and risk management.
To maintain accurate pricing, Hyperliquid uses a decentralized oracle system, with validators updating spot prices from major exchanges every three seconds, ensuring price integrity and reducing manipulation risks. The system determines funding rates, margin calculations and liquidation processes using these price updates, ensuring price integrity and reducing manipulation risks.
What Are The Features of Hyperliquid?
- Layer 1 Blockchain: Hyperliquid operates on a proprietary Layer 1 blockchain optimized for performance and scalability.
- HyperBFT Consensus Algorithm: This custom consensus mechanism allows for rapid transaction processing with sub-second finality, handling up to 200,000 transactions per second.
- On-Chain Order Book: Unlike many DEXs that rely on off-chain solutions, Hyperliquid maintains its entire order book on-chain, ensuring transparency and verifiability of all transactions.
- Zero Gas Fees: Users incur only minimal trading fees (0.01% for makers and 0.035% for takers), making it cost-effective for both retail and high-frequency traders.
- Leverage Options: The platform offers leverage of up to 50x on perpetual futures across more than 130 supported assets, enhancing trading opportunities while maintaining risk management protocols.
What is the HYPE Token?
he HYPE token is the native cryptocurrency of the Hyperliquid blockchain, serving as the backbone of its ecosystem. It plays a key role in governance, staking and enabling advanced transactions within the HyperEVM. HYPE integrates utility, decentralization and community-driven incentives. HYPE holders actively shape the network by voting for meaningful upgrades and changes, ensuring a decentralized decision-making process.
The token also supports staking, allowing users to secure the network while earning rewards. Although most Hyperliquid transactions are gas-free, HYPE is essential for advanced operations, including smart contract interactions and powering decentralized applications (DApps).
What Are The Use Cases of Hyperliquid?
Perpetual and Spot Trading: Hyperliquid operates as an on-chain decentralized exchange (DEX) with features resembling centralized exchanges (CEX), such as perpetual futures, high leverage, and advanced order types (e.g., market, limit, stop-loss). On-chain Central Limit Order Book (CLOB) is a mechanism that ensures lower slippage, transparency, and efficient price matching without relying on Automated Market Makers (AMMs)
High-Frequency Trading: Hyperliquid’s custom Layer-1 blockchain supports ultra-low latency (0.2 seconds) and massive throughput (up to 200,000 transactions per second), making it ideal for HFT strategies.
Liquidity Provision: Users can pool funds to provide liquidity for trades, earning yields from funding payments and trader losses. Besides LP, Hyperliquid Vaults allows users to copy strategies of experienced traders.
Smart Contract Deployment: With the launch of HyperEVM, developers can deploy EVM-compatible smart contracts and build decentralized applications (dApps) directly on the chain. These apps benefit from integrated financial primitives like native order books and trading mechanics.
Governance and Staking: The HYPE token enables governance participation, trading fee discounts, and staking rewards within the ecosystem.
Hyperliquid Token $HYPE Airdrop and Tokenomics
The project airdropped 310 million HYPE tokens on November 29, 2024, representing 31% of the total supply, to over 90,000 users. The price of $HYPE was trading at $3.20 and went to $4.18 in a matter of few hours. Hyperliquid allocated 23.8% of its total supply for core team members and contributors.
Alongside the core team, 28.88% of its supply is earmarked for incentivizing participants and 0.3% of HYPE tokens is allocated for community driven projects on the protocol. The platform has set 6% of its token supply for future development and 0.012% of the supply for governance.
Hyperliquid employs a deflationary strategy where a portion of transaction fees is used to buy back and burn HYPE tokens. This mechanism aims to reduce supply over time, enhancing scarcity and potentially increasing the token’s value. The burn process can benefit long-term holders by enhancing the value of their remaining tokens. It also signals the project’s commitment to sustainable growth and investor interests.
What is the utility of HYPE in the Hyperliquid Ecosystem?
HYPE is used for some of the following activities on the protocol
- Governance: HYPE token holders can propose and vote on changes to the protocol, influencing decisions related to platform upgrades, fee structures, and new features.
- Fee Payment: HYPE serves as the primary medium for transaction fee payments on the Hyperliquid platform, often with discounts for users who pay fees in HYPE.
- Staking Rewards: Users can stake their HYPE tokens to earn additional rewards, contributing to network security while incentivizing long-term holding.
- Liquidity Mining Rewards: Users providing liquidity can earn HYPE tokens as rewards, ensuring deep liquidity pools and seamless trading experiences.
Who Are The Founders of Hyperliquid?
Jeff Yan and Iliensinc are the founders of Hyperliquid. Mr Yan graduated from Harvard University with an AB/SM in Mathematics and Computer Science in 2017. Yan began his career in high-frequency trading at Hudson River Trading. He later transitioned to crypto space, where he built one of the largest market-making firms. His experience spans both traditional finance and cryptocurrency markets. Iliensinc is the co-founder of Hyperliquid Labs and he attended Harvard along with Jeff Yan.
Besides the co-founders, the team of Hyperliquid includes experts from prestigious institutions like Caltech, MIT, Citadel, and Hudson River Trading, ensuring a diverse range of skills in finance, trading, and blockchain technology
HYPE Token Price and Market Performance
Source: TradingView
HYPE token is trading at $13.53 and has a market cap of $4.408 billion. The RSI value is 40.99, below the neutral level of 50, indicating a slight bearish momentum. MACD histogram of HYPE is in the neutral zone indicating indecisiveness amongst traders and investors. Traders may watch for further confirmation of reversal or continuation of the downtrend based on these indicators.
How to Long / Short $HYPE Tokens Perpetuals?
To trade in $HYPE token futures, you need to create an account on Bitunix. If you are already a registered user, you can skip this step. To trade in HYPE tokens, navigate to the main menu and click on the Markets tab and select ‘Marketplace’.
Now, simply choose futures trading and look for HYPE/USDT pair.
Now, click on trade to open the trading window.
Now you can place a long (buy) or short (sell) order for HYPE. To ensure a smooth experience, make sure you have your account adequately funded.
Wondering how to deposit crypto on Bitunix? Watch our tutorial on How to deposit crypto on Bitunix?
