HyperUnit: The Hidden Engine Powering Hyperliquid

What is HyperUnit?

HyperUnit (often referred to as Unit) is a tokenization protocol partially developed by the Hyperliquid team, designed to manage decentralized asset transfers across blockchains.

Unit’s purpose is to allow users to deposit and withdraw assets to and from Hyperliquid without relying on centralized exchanges or third-party bridges—while maintaining high standards of security and compliance.

Unlike most bridge solutions, Unit is neither custodian-based nor reliant on synthetic assets. Instead, it functions as a native tokenization layer: when a user deposits an asset from another blockchain, the protocol verifies, signs, and initiates the creation of its native equivalent directly on Hyperliquid.

Note: More specifically, Unit facilitates deposits and withdrawals to HyperCore, the network that powers the Hyperliquid DEX. Transfers to HyperEVM are handled by the L1 Hyperliquid infrastructure.

Ultimately, Unit operates as an orchestration layer for cross-chain infrastructure, relying on a distributed network of nodes called Guardians. These operators validate and execute user actions (deposits, withdrawals, access control) while ensuring funds remain traceable, verifiable, and non-custodial.

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Why Unit Matters

HyperUnit is far more than a deposit/withdrawal module. It is a key strategic component in Hyperliquid’s overarching thesis to become The House of All Finance—a fully on-chain environment built to rival centralized platforms like Binance.

Such a vision is not achievable without a native tokenization system that can connect Hyperliquid with other chains while offering a seamless, secure, and self-custodial user experience. That’s exactly where Unit comes in.

But Unit’s value goes beyond transfers. It also fosters interoperability with other decentralized applications. A few notable examples:

• Stargate (built by LayerZero) recently launched an ETH bridge to HyperCore from all supported chains.
• Garden Finance, a platform enabling various use cases for bitcoin, now allows trustless conversion of any wrapped BTC into uBTC by integrating Unit as its entry point.
• Ethena, the issuer of the synthetic dollar USDe, announced deployment on Hyperliquid, both on HyperCore and HyperEVM.

Unit, therefore, turns Hyperliquid from a high-performance DEX into a multifunctional, interoperable platform. Its long-term goal: allow users to operate entirely within the Hyperliquid ecosystem—regardless of the action they wish to take—with no need to exit or bridge externally.

“BTC is the most important crypto asset and historically the most difficult to bring to defi. Most wrapped BTC options today involve a single custodian, contradicting the ethos of defi.

Unit protocol's guardian architecture is a generalized solution bringing self-custody to a wide range of asset sources. When a user deposits, trades, and withdraws BTC using Unit and Hyperliquid, they maintain full control of their assets at all times.

Like Hyperliquid, Unit abstracts away the underlying technological complexity from the end user. Send BTC to an address, and it's ready for trading. Finally a BTC trading solution Satoshi would approve of: trustless and self-custodial, without sacrificing user experience.

Unit's launch brings Hyperliquid one step closer to housing all finance. It will be exciting to see Hyperliquid's world class liquidity and UX extend to many more important financial assets.”

— Jeff Yan, founder of Hyperliquid

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Unit Architecture

HyperUnit is architected around a distributed network of Guardians—independent operators who each run a local implementation of the Unit protocol. Together, these Guardians handle deposit and withdrawal verifications, coordinate actions, and enforce the cryptographic integrity of the system. The entire infrastructure is designed to be non-custodial, traceable, and resilient.

The Guardian Network

At the core of Unit lies a distributed network of independent operators called Guardians. Each Guardian runs an Agent, a piece of software developed by the Unit team that locally executes protocol logic.

The Guardian’s role is to host a node and index multiple supported blockchains (Bitcoin, Ethereum, Solana, etc.), monitoring on-chain activity in real time to detect and verify asset deposits and finalize transactions.

As part of a distributed system, Guardians participate in a Multi-Party Computation (MPC) signature process, ensuring that no single entity can unilaterally validate or complete a critical operation. Each Guardian also holds a portion of a cryptographic key, stored securely.

In essence, Guardians serve as off-chain decentralized validators for Unit, ensuring that all cross-chain transfers are processed in a non-custodial, auditable, and coordinated way.

The Agents

Each Guardian operates a local Agent, which is built around four key components:

• Chain Services – These modules monitor all supported blockchains, detect deposits, confirm transaction finality, and prepare the necessary payloads for withdrawals or minting actions.
• Flow Manager – A deterministic state machine that validates the correct sequencing and integrity of each operation (verification, signature, broadcast, etc.).
• Consensus Service – Implements a quorum rule (e.g. 2-of-3), ensuring that no Guardian can complete a sensitive operation on its own.
• Wallet Manager – Handles cryptographic operations through MPC Threshold Signatures, relying on secure enclaves (such as AWS Nitro) to locally encrypt and store each key share.

This modular setup ensures that all Guardians independently verify actions and that sensitive transactions require a collective signature threshold to execute.

Threshold Signatures (TSS and MPC)

For any critical operation—such as minting an asset on Hyperliquid or initiating a withdrawal—HyperUnit employs a 2-of-3 threshold signature scheme via Multi-Party Computation (MPC):

• Private keys never exist in full. They are created and stored in split form across multiple Guardians.
• Each Guardian holds an encrypted key share, stored in a secure enclave.
• Signatures are jointly produced, requiring at least two Guardians to collaborate—without ever reconstructing the full key in memory.

Private key material is secured inside isolated hardware enclaves (e.g., Intel SGX or similar), preventing extraction even under physical access. This guarantees non-custodial safety while maintaining system flexibility and robustness.

Secure Communication

All communication between Guardians is end-to-end encrypted. Messages are relayed through a relay server, typically operated by the quorum leader. Importantly, this relay server holds no sensitive information or keys—it only transmits encrypted messages.

To further protect consensus, out-of-band authentication is used: each Guardian verifies the identity of its peers using credentials exchanged through external, secure channels—blocking spoofing or impersonation attempts.

Even if the relay server were compromised or taken offline, Unit’s architecture ensures that neither consensus nor cryptographic integrity would be affected, as neither rely on the relay's trustworthiness.

Runtime Integrity

To mitigate the risk of malicious updates, each Guardian regularly verifies the runtime version and configuration hashes of its local software. No update is accepted without explicit validation, preventing corrupted or unauthorized versions of the protocol from running.

All public keys of participating Guardians are also shared and validated off-band, neutralizing attempts to inject rogue participants into the consensus.

Further protection includes:

• Rate-limiting on protocol endpoints to mitigate denial-of-service attacks.
• A collective circuit breaker, which can be triggered automatically in the event of abnormal or malicious behavior—halting operations until manual resolution by the Guardians.

Distributed Verification

Every Guardian maintains its own indexer and independently logs all operations it executes. This creates a tamper-proof trail and ensures no single Guardian can act out of line without being detected.

Execution states are continuously synchronized between all Guardians, maintaining real-time consensus and enabling robust post-event auditing. Together, these systems create multiple layers of defense to secure the Unit protocol.

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On-chain Metrics and Adoption of Unit

Unit officially went live on mainnet on February 14, 2025. In just under four months, the protocol has already enabled $2.95 billion in total trading volume on Hyperliquid’s spot market: around $2.5 billion in BTC and approximately $450 million in ETH. Notably, ETH support was only added on March 27.

Over the last 30 days, this places Hyperliquid as the #1 decentralized exchange for native BTC spot volume, ahead of Thorchain. If we include all forms of BTC (including synthetic or wrapped variants), Hyperliquid ranks 4th, trailing behind Uniswap, Aerodrome, and PancakeSwap.

Beyond powering the spot market itself, Unit also acts as the entry point for transferring BTC or ETH into Hyperliquid—whether to be used as collateral for margin positions, or within the broader HyperEVM ecosystem. Thanks to the HyperDash dashboard, users can monitor all flows handled by Unit.

To date, Unit has processed 1,182.69 BTC (approx. $112.29 million) and 9,619.88 ETH (approx. $21.16 million) in inbound flows from their native chains to Hyperliquid. These are net flows, and it's worth noting that Unit has seen some days of net outflows in recent weeks.

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Notes, Outlook, and Limitations

Unit is emerging as a core lever in Hyperliquid’s broader strategic vision. While most DEXs and blockchains still rely on external bridges or synthetic assets, Unit introduces a native tokenization infrastructure fully integrated into HyperCore.

From a regulatory standpoint, the protocol adopts a cautious posture: it is positioned as a software layer, without a centralized operating entity, where each Guardian acts independently and never takes custody of user funds.

Several mechanisms have been implemented to ensure compliance, including:

• OFAC compatibility
• The ability to block IP addresses from specific jurisdictions
• Guardrails to avoid classification as a mixer or synthetic asset issuer

Note: For some observers, these built-in restrictions raise questions about the permissionless nature of the Hyperliquid ecosystem — which could eventually affect its competitiveness against more open platforms.

On a technical level, the infrastructure currently relies on a restricted quorum — composed of just three Guardians (Unit, Hyperliquid, and Infinite Field) — and supports a limited set of blockchains. While this design enables a secure and controlled launch, the next key milestones for Unit will be:

• Expanding the Guardian network
• Opening governance
• Broadening interoperability with additional ecosystems

In essence, Unit goes far beyond solving the bridge problem: it lays the foundation for a network where assets can circulate, interact, and generate value within a unified system. This makes it a foundational pillar of Hyperliquid’s ambition to become The House of All Finance.