Hyperliquid (HYPE)

Hyperliquid (HYPE) is the native token of Hyperliquid, a decentralized exchange best known for trading perpetual futures, and of the layer-1 blockchain that the exchange runs on. HYPE is staked to secure that blockchain, pays fees on its smart-contract layer, and is bought back with exchange revenue. Its total supply is capped at 1 billion tokens.

Unlike most decentralized exchanges, which are programs deployed on a general-purpose network such as the Ethereum Blockchain, Hyperliquid built a chain whose main job is running a fully on-chain order book. The exchange is developed by Hyperliquid Labs, led by Jeff Yan, and supported by the Hyper Foundation. The project took no outside venture funding, which shaped how its tokens were distributed.

Think of a busy trading floor where every bid, offer and completed trade is written on a public scoreboard that anyone can check, and where nobody holds your money behind the counter. Hyperliquid tries to give traders the speed and feel of a large crypto exchange while keeping that scoreboard open and the funds in users' own wallets.

Most of the activity is in contracts that let traders bet on whether a coin's price will rise or fall, often with borrowed money, without ever owning the coin. HYPE is the membership token of the whole operation. Holders can lend it to the computers that keep the scoreboard honest and earn rewards, and most of the fees the exchange collects are used to buy HYPE on the open market.

Hyperliquid began operating as a perpetual futures exchange in 2023, using a points programme to reward early traders. On 29 November 2024 it held its genesis event, distributing 310 million HYPE, 31 percent of the supply, as an airdrop to users who had earned points. The tokens were fully unlocked on day one, and the airdrop was widely described as one of the largest in crypto by value. Around 39 percent of supply was set aside for future emissions and community rewards, with smaller shares for the foundation, grants and core contributors. On 18 February 2025 the Hyper Foundation launched HyperEVM, a smart-contract environment built into the same chain, and later that spring linked it to the exchange so that applications could read and use order-book data.

The chain has two parts that share one consensus, called HyperBFT, a form of Byzantine fault tolerance. HyperCore holds the order book, margin accounts and liquidations, while HyperEVM runs smart contracts compatible with the Ethereum Virtual Machine and uses HYPE as gas. Block producers are validators chosen by proof of stake, and holders can delegate HYPE to them. Traders mostly post USDC as collateral.

Perpetual contracts have no expiry date, so a funding payment keeps their price close to the spot market. When the contract trades above spot, holders of long positions pay holders of short positions, and the reverse when it trades below. Hyperliquid settles funding every hour:

• $F$ is the funding payment for one interval, in US dollars.
• $N$ is the notional value of the position, its size multiplied by the oracle price.
• $f$ is the funding rate for that hour, positive when longs pay shorts.

A trader holding a long position worth $50{,}000$ dollars when the hourly rate is $0.01\%$ pays $50{,}000 \times 0.0001 = 5$ dollars to short holders for that hour. Positions whose losses eat through their margin are closed by liquidation, a process close to a margin call with no time to add funds.

HYPE has a fixed maximum of 1 billion tokens. Most trading fees, reported at 97 percent or more, flow to the Assistance Fund, a protocol-controlled account that converts them into HYPE by buying on the market. By 2026 the fund had bought tens of millions of tokens. Supporters compare it to a share buyback; critics note that the policy depends on trading volume and could be changed. Buybacks do not change the cap, but tokens held by the fund are no longer available to trade.

• Trading. Hyperliquid became one of the largest venues for crypto derivatives by volume, competing with large centralized exchanges.
• Staking. Delegated HYPE secures the chain and earns rewards; see staking.
• Gas and applications. HYPE pays fees on HyperEVM, where lending markets and other DeFi applications use the exchange's prices and liquidity.
• Fee discounts. Staking HYPE lowers the trading fees an account pays.

In March 2025 a trader opened a large short position in the perpetual contract for JELLY, a thinly traded meme coin, then let it be liquidated so that the community liquidity vault, HLP, inherited it as the token's price was pushed up. The vault faced losses estimated at more than 10 million dollars before validators voted to delist the contract and settle it at a fixed price, and the foundation said it would compensate most affected users. The intervention protected depositors but drew criticism that a small validator set could step in and overrule the market. Other concerns include the concentration of validators, the high leverage offered to retail traders, and uncertainty over how regulators will treat offshore derivatives venues that anyone can reach.

• Hyperliquid
• Hyperliquid documentation