Hyperliquid (HYPE) Investment Thesis: The House of Finance

This research paper is a joint collaboration between OAK Research and GL Capital, an independent team of analysts focused on the financial part of the cryptocurrency market. Be sure to give them a follow on Twitter and join their telegram if you want to learn more about their work.

Introduction

The previous bull cycle marked a major milestone in the evolution of cryptocurrencies. In 2020-2021, millions of new investors entered the market, and their first experience was through centralized platforms. Binance, FTX, and Coinbase became the go-to exchanges for crypto trading, thanks to their ease of use.

Then, in November 2022, everything changed. The collapse of FTX shattered an illusion—the belief that centralized actors could serve as trusted intermediaries in the crypto ecosystem. The scandal left a lasting impact on investors, pushing them to seek refuge in decentralized finance.

But a harsh reality quickly emerged. While the promise of DEXs was appealing, none had the infrastructure necessary for high-frequency trading. Insufficient liquidity, high latency, and expensive fees, to name some of them, were the main limitations for DEXs to have a chance against the seamless experience offered by CEXs.

Hyperliquid was born to fill this gap. The idea was simple: build a DEX that combines the power of centralized platforms with the transparency and sovereignty of decentralized finance. But achieving this required breaking free from existing technological constraints. Since no blockchain met the technical demands of a trading application, the Hyperliquid team took a bold bet—to build it themselves.

Two years later, that bet has proven to be successful (so far). Hyperliquid now captures over 70% of the trading volume in the perpetual DEX market and is redefining industry standards. The gap between CEXs and DEXs is closing rapidly, and for the first time, a decentralized alternative appears capable of competing with the giants of the market.

In this research, we will propose an investment thesis on Hyperliquid, based on the following assumption: Hyperliquid has everything it takes to become “The House of Finance”.

We are making this research freely accessible to help the community better understand the key aspects of Hyperliquid. If you would like to support our work, you can use our referral link (code OAKGLC) to sign up on Hyperliquid. This costs you nothing but helps us continue producing high-quality content.

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Hyperliquid description

Hyperliquid has taken a unique approach to the decentralized trading sector. While most perpetual DEXs are built on existing blockchains, inheriting their limitations in scalability and performance, Hyperliquid made the choice to develop its own custom-built infrastructure.

More than just a DEX, Hyperliquid is a complete financial ecosystem, designed to become a "fully on-chain version of Binance," as Messari aptly described it in a July 2024 analysis. Today, Hyperliquid is built on four key technological pillars that support this vision:

• A high-performance perpetual DEX, capable of competing with CEXs in terms of execution speed, liquidity depth, and advanced trading tools.
• A rapidly growing spot market, offering a transparent on-chain order book and an innovative infrastructure for token issuance and listing.
• A dedicated Layer 1 blockchain (Hyperliquid L1), specifically designed to support high-frequency order book trading and near-instant transaction finality.
• HyperEVM, an integrated Ethereum Virtual Machine, expanding the ecosystem to native smart contracts and DeFi applications.

Now let’s look at the various features Hyperliquid offers today.

A Perpetual DEX

The flagship product of the Hyperliquid ecosystem is its decentralized exchange (DEX) specializing in perpetual contracts. Unlike competitors in the sector, which rely on automated market makers (AMMs), Hyperliquid has chosen to build a centralized order book that operates entirely on-chain. This approach, historically used by centralized platforms, provides traders with a high-quality trading experience.

One of Hyperliquid’s biggest strengths is its ultra-low latency, with order finalization times ranging from just 200 to 900 milliseconds. This level of performance is made possible by its proprietary infrastructure (the Layer 1 blockchain, which we’ll discuss later), capable of processing up to 100,000 orders per second, eliminating congestion and slippage issues.

Another key advantage of the DEX is its highly competitive fee structure, aligning with the standards set by centralized exchanges. Unlike most DEXs, where users must pay gas fees on every transaction, Hyperliquid directly integrates these costs into its trading fees. As a result, the platform offers some of the lowest fees on the market (0.03% for takers, 0.005% for makers).

Alongside this, Hyperliquid has introduced a "Vault" system. These function like decentralized investment funds, where users can delegate their funds and share in the profits (or losses) generated by the protocol. The most notable of these is the Hyperliquidity Provider (HLP), a vault managed by the Hyperliquid team that acts as a market maker for the protocol. Currently, HLP holds $500 million in TVL and has so far had an annualized return of 10% since its launch in August of 2024.

Additionally, Hyperliquid has established a revenue-sharing model and a HYPE token buyback mechanism. Unlike CEXs, where trading commissions fuel profits of the exchange itself, Hyperliquid redistributes 100% of trading fees back to its community. This redistribution occurs in several ways:

• Market makers (liquidity providers) receive rebates, allowing them to recover a portion of the fees they pay.
• Referrers earn 10% of the fees generated by the traders they onboard, creating an organic growth model.
• The remaining revenue funds an on-chain Assistance Fund, held in HYPE tokens, which serves as a stability reserve for the protocol.

Furthermore, Hyperliquid’s validators have chosen to leverage this Assistance Fund to implement a buyback mechanism: a portion of trading fee revenue is used to buy back HYPE tokens from the market, thereby reducing the circulating supply and creating upward price pressure on the token.

To look back at some growth data, Hyperliquid has gone from less than 1% market share of the DEX Perps sector in January 2023 to almost 90% today. This growth brings Hyperliquid to almost 10% of Binance's volumes in the perpetual segment, a record for a decentralized platform.

A Spot DEX

While Hyperliquid first established itself as a leader in the perpetual DEX sector, its ambitions extend far beyond derivatives trading. In February 2025, Hyperliquid took a major step forward by introducing a native spot market on its platform. This innovation was accompanied by a key breakthrough: Unit, an asset tokenization protocol that ensures native integration without requiring conversion into synthetic tokens.

With this expansion, Hyperliquid is replicating a trading experience that, until now, had only been achieved on centralized platforms, all while remaining fully on-chain. The full interoperability between the spot and perpetual markets allows traders to either use their spot holdings as collateral for derivative markets or execute advanced strategies like funding rate arbitrage or basis trading.

Another major advantage of this integration is the elimination of gas fees on spot trading, similar to what already exists for perpetual contracts. Transactions are recorded on-chain, but costs are seamlessly integrated into trading fees. This is further complemented by an order book ensuring deep liquidity, tight spreads, and fast execution, allowing Hyperliquid to compete with top-tier centralized exchanges.

Although the spot market currently supports only BTC and HYPE, Hyperliquid is already among the top 10 largest DEXs globally and ranks within the top 5 blockchains by spot trading volume. If we consider the ratios observed on major centralized platforms—where spot volumes typically represent 18% to 30% of perpetual trading volume—the addition of more assets could immediately boost trading volume.

A Layer 1 Blockchain

Hyperliquid didn't just build a high-performance DEX—it designed an entire blockchain from the ground up to meet the technical demands of its platform. Hyperliquid’s Layer 1 was specifically engineered to support a high-frequency order book and ensure near-instant transaction finality.

At the core of this blockchain lies the HyperBFT consensus mechanism, an optimized version of Byzantine Fault Tolerant (HotStuff/LibraBFT) algorithms. This protocol enables the blockchain to achieve block times of less than one second, with a theoretical capacity of 2 million transactions per second. In practice, Hyperliquid already supports up to 100,000 orders per second.

Above HyperBFT, two fundamental components form the Hyperliquid ecosystem:

• HyperCore: The native execution layer (Layer 1, coded in Rust) that manages the core of the protocol (perpetual order book, spot market, risk management, and liquidations) while delivering high performance (200,000 TPS and a block time of 0.07 seconds).
• HyperEVM: The EVM-compatible layer, enabling developers to deploy smart contracts and decentralized applications while benefiting from HyperBFT’s performance and Hyperliquid’s liquidity.

This is a key differentiation compared to traditional Layer 1 blockchains, which rely on a single environment for all operations, or Layer 2 solutions, which inherit the limitations of their base layer. Hyperliquid’s blockchain is optimized both for a vertical application (trading) through HyperCore (and RustVM) while remaining horizontally extensible to other DeFi use cases through HyperEVM.

One of the most critical aspects of Hyperliquid’s architecture is that HyperCore and HyperEVM share a unified state. This means no bridges, proofs, or trusted signers are required for interactions between the two layers.

In terms of governance and security, Hyperliquid operates on a Proof-of-Stake (PoS) model with a limited number of validators. At launch, only four validators were responsible for block production, raising concerns about centralization. By early 2025, this number had increased to 16, with a commitment to progressively onboard more independent validators.

Similarly, the protocol’s code is not yet fully open-source. The team justifies this decision by citing the need to prioritize performance optimization before decentralization, promising to open-source the codebase once the software reaches a stable state.

Finally, the network’s economic model revolves around the HYPE token, which plays a central role in governance and blockchain operations. Launched in November 2024 via an airdrop of 310 million HYPE tokens, the asset is predominantly community-owned (76% of the total supply) according to its tokenomics. Additionally, a buyback & burn mechanism is in place, using a portion of transaction fees to burn HYPE tokens from the market, mirroring Binance’s BNB model, where the success of the protocol is directly linked to the performance of its native token.

HyperEVM

With the launch of HyperEVM in February 2025, Hyperliquid took another major step into expanding its ecosystem. This Ethereum-compatible virtual machine, built on Hyperliquid’s Layer 1 blockchain, enables the development of a full-fledged DeFi ecosystem, allowing decentralized applications (dApps) to thrive within its infrastructure.

HyperEVM is natively integrated into the Hyperliquid L1, as it operates on the same consensus layer. This means that all transactions—whether from the DEX or DeFi applications—are validated by the same nodes and included in the same blocks. This approach eliminates liquidity fragmentation issues and ensures seamless interoperability between DeFi applications and the DEX’s core functionalities.

For example, a lending protocol deployed on HyperEVM could directly accept spot assets held on Hyperliquid as collateral, creating deeper capital efficiency across the ecosystem.

The launch of HyperEVM marks the first step toward Hyperliquid’s ultimate ambition: to bring all financial applications on-chain. Among the first projects emerging on the network are:

• HyperLend – A decentralized lending/borrowing protocol, enabling users to collateralize assets natively.
• HyperSwap – An AMM-based decentralized exchange, designed to complement the existing order book model of the core Hyperliquid DEX.
• Kinetiq – A financial infrastructure project, aiming to build key primitives for DeFi within Hyperliquid’s ecosystem.

Despite its ambitious potential, HyperEVM still faces several hurdles before achieving widespread adoption. Transaction fees (paid in HYPE) have occasionally surged to extremely high levels during periods of heavy network traffic, particularly during the minting of highly anticipated NFT collections. This has raised concerns about the network’s actual performance and scalability.

Moreover, while early DeFi applications have started deploying, the long-term success of HyperEVM will depend on whether it can attract a broader developer community and establish a thriving ecosystem beyond its native trading products.

We are making this research freely accessible to help the community better understand the key aspects of Hyperliquid. If you would like to support our work, you can use our referral link (code OAKGLC) to sign up on Hyperliquid. This costs you nothing but helps us continue producing high-quality content.

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The Keys to Hyperliquid’s Success

Hyperliquid took a radically different path compared to most blockchain projects. No fundraising, no venture capital involvement—the team opted for self-financing. This bold decision allowed them to maintain an independent vision and build a model where the success of the protocol directly benefits its users.

The real strength of Hyperliquid lies in its development strategy, which goes against the industry's standard practices. Instead of trying to sell the vision of a high-performance blockchain from the beginning, the team focused on developing a product that would establish itself as a reference and serve as a showcase for their technology.

In the same spirit, Hyperliquid made a conscious choice to prioritize performance and adoption before fully opening up its governance. This strategy is based on the principle that finding a product-market fit should come first before gradually transferring control to the community.

Hyperliquid has continuously refined its product. For two years, the team maintained a highly responsive feedback loop with its community of traders, implementing real-time improvements. As a result, the success of the DEX highlighted their key innovation: a blockchain optimized for trading, featuring a fully on-chain order book, a throughput of 100,000 transactions per second, and near-instant finality.

The massive HYPE airdrop marked the culmination of this vision and development phase. Unlike many projects that launch their token prematurely or fail to prioritize their community, Hyperliquid ensured that it had a robust product and sufficient adoption, strengthening the intrinsic value of HYPE. And therefore, Hyperliquid found its MOAT.

At the launch of the HYPE token, Hyperliquid heavily rewarded its community: 31% of the total supply was distributed during the Genesis Airdrop to 94,000 active users, while no private investors received preferential allocations. In total, an estimated 76% of the HYPE supply is reserved for the community.

The average Hyperliquid allocation per user was 2,915 HYPE, which was worth approximately 100,000 dollars at the token’s all-time high of $36 in December 2024. At that moment, the total value of the airdrop reached 11 billion dollars, making it the largest in crypto history, surpassing Uniswap’s airdrop, which peaked at 6.4 billion dollars in May 2021.

The perceived value of HYPE is also reinforced by a self-sustaining loop that directly aligns the protocol’s growth with the demand for HYPE. Assistance Fund (AF) uses 100% of the revenue to buy back the token from the market. As of now, the fund holds 16.63 million HYPE, representing 4.97% of the circulating supply, valued at over 267 million dollars.

Ultimately, instead of building an ecosystem while waiting for hypothetical future adoption, Hyperliquid reversed the process: proving the product's utility and performance first and using it as a natural lever to attract developers and build a robust and sustainable ecosystem.

In summary, Hyperliquid’s success can be attributed to:

• A unique model, free from private funding and designed for users
• A strategy focused on the product rather than the technology
• A product built by traders, for traders
• A massive HYPE airdrop for the community
• An economic model that directly benefits the HYPE token
• A mispriced valuation at launch of a simple DApp instead of a high-performance L1 with its own ecosystem and its product dominating its sector

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Hyperliquid Valuation Model

This section was written by the GL Capital team. The detailed analysis is available in their thread on X, and we encourage you to check it out and support their work by following them there.

Methodology

Hyperliquid stands apart from the rest of the ecosystem, with no true direct comparison. The project’s development has been entirely self-financed, fostering organic and sustainable growth. The revenues generated by the protocol are among the highest in the industry and are entirely reinvested into HYPE buybacks through the Assistance Fund.

Considering Hyperliquid’s intrinsic value, fundamentals, and growth potential, it appears that the HYPE token currently offers an attractive risk/reward ratio. In this section, we will break down this thesis through a valuation model for Hyperliquid.

To properly assess Hyperliquid’s valuation, it is essential to differentiate between its key components: Perps, Spot, and Layer 1. The methodology used involves evaluating each sector separately and aggregating them through a sum-of-the-parts (SOTP) approach to determine an overall valuation for HYPE.

The two primary models for valuing an asset are cash flow analysis and market multiples. Given the unpredictability of the crypto market in the medium and long term, we have chosen the market multiples approach for Hyperliquid’s valuation model.

Perps DEX Valuation

The valuation of the Perpetuals (Perps) trading segment is based on several key parameters:

• The total perpetuals trading volume across the four largest centralized exchanges (CEXs), estimated at $53.4 trillion over the last 12 months.
• The forecasted trading volumes for 2025-2026.
• Hyperliquid’s current market share (4.5%).
• The trading fee rate applied by the platform (0.025% per transaction).

Since crypto markets are inherently volatile, forecasting these variables remains highly uncertain. To build a robust valuation model, we applied a sensitivity analysis, setting certain assumptions and incorporating contrasting scenarios to reflect various possible market developments.

One of the most critical factors is the evolution of total Perps trading volume. We defined three scenarios:

• Conservative Scenario: A 50% decline in trading volumes due to a prolonged bear market.
• Basic Scenario: Trading volumes remain unchanged over the next 12 months.
• Optimistic Scenario: A 25% increase in trading volumes in the event of market expansion.

Regarding Hyperliquid’s market share in this sector, several factors suggest a potential increase in the coming months. We have therefore outlined three progressive market share growth scenarios:

• Bear Case: Market share remains at 4.5%.
• Base Case: Market share grows to 6%.
• Bull Case: Market share expands significantly to 8%.

The valuation model chosen is based on the revenue-to-market capitalization ratio for HYPE. This valuation multiple is another key variable: under normal conditions, DEXs typically trade at an average of 10x their revenue. However, Hyperliquid’s systematic HYPE buyback mechanism creates continuous buying pressure, justifying a higher multiple, estimated here at 15x revenue.

Based on these factors and the various scenarios, a valuation range has been established. Projections suggest that the intrinsic price of Hyperliquid’s Perps segment falls between $11 and $16 per HYPE.

Spot DEX Valuation

The valuation of the Spot trading segment is based on a comparison with centralized exchanges (CEXs), where Spot trading volumes typically represent between 18% and 30% of Perps trading volumes. Applying this trend to Hyperliquid, we assume that its Spot market will reach between 15% and 30% of Perps trading volume.

Since trading fees are identical across both markets (0.025%), we modeled two scenarios:

• Conservative Case: Spot revenues account for 15% of Perps revenues.
• Optimistic Case: Spot revenues reach 30% of Perps revenues.

We applied the same sensitivity analysis as for the Perps market, examining multiple pricing configurations for HYPE. As a reminder, the three scenarios are: market share remains at 4.5% (bear case), market share grows to 6% (base case) and market share expands significantly to 8% (bull case).

The valuation model (applying a 15x revenue multiple) suggests that the most reasonable valuation levels are around $3 to $4 per HYPE. However, the range has been extended to $6 to account for a key factor: potential fee structure adjustments.

Currently, Hyperliquid applies the same trading fee rate to both Spot and Perps markets, whereas CEXs generally charge significantly higher fees for Spot trading. This pricing policy appears to be a strategic adoption incentive. However, if Hyperliquid were to increase its Spot trading fees to align with industry standards, its revenues could grow significantly.

By factoring in this potential fee increase, we estimate that the valuation of Hyperliquid’s Spot segment falls within a range of $3 to $6 per HYPE.

Layer 1 Valuation

Valuing a Layer 1 blockchain is particularly complex. Unlike DEXs, whose valuation can be based on revenue generation, a Layer 1 derives its value from adoption and ecosystem growth. In the case of Hyperliquid, almost all current revenue comes from Perps trading, rather than from the blockchain itself.

Historically, the market has assigned very high valuations to Layer 1 blockchains, sometimes without significant on-chain activity. Given this, we believe that Hyperliquid’s Layer 1 and HyperEVM are currently undervalued. If the team successfully executes its vision and attracts a thriving ecosystem of applications, the valuation of the blockchain could increase significantly.

Thus, we opted for a comparative valuation approach, benchmarking against other Layer 1 blockchains based on their tiers. From this, we defined three scenarios:

• Pessimistic Scenario: Minimal adoption, no applications, and no user flow, resulting in zero valuation.
• Base Scenario: Comparable adoption to Tier 2 blockchains, benefiting from synergies between the Layer 1 and Hyperliquid applications. This estimate is based on the weighted average of five mid-tier Layer 1 blockchains.
• Optimistic Scenario: Hyperliquid becomes a major blockchain for on-chain finance, a trading hub with a dynamic ecosystem. In this case, its valuation could reach 30% of Solana’s.

Even though this valuation remains somewhat subjective, it aligns with how the market has historically valued high-performance Layer 1 blockchains. Based on this framework, we estimate that Hyperliquid’s Layer 1 valuation falls within a range of $18 to $27 per HYPE.

Final Valuation of HYPE

After assigning a valuation range to each segment of Hyperliquid (Perps, Spot, and Layer 1), we can now aggregate these components to determine the intrinsic value we attribute to HYPE.

The model results in a price range of $32 to $49 per HYPE. This figure includes a 20% premium, reflecting the upcoming catalysts that we will cover in the next section and that could further strengthen the project's valuation. Additionally, we consider that applying a 15x multiple on revenue remains a conservative approach, given Hyperliquid's growth potential.

Assessing downside risk is equally crucial. At the current price of $14, in the worst-case scenario (no market share growth, a 50% drop in trading volume, and no valuation for the Layer 1), we estimate that the maximum downside could reach 55%.

We are making this research freely accessible to help the community better understand the key aspects of Hyperliquid. If you would like to support our work, you can use our referral link (code OAKGLC) to sign up on Hyperliquid. This costs you nothing but helps us continue producing high-quality content.

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Upcoming Catalysts

In this section, we will analyze the key catalysts that we believe will drive Hyperliquid’s growth through 2025 and help it reach the price levels mentioned in our valuation. Additionally, as with any thesis, it is essential to present invalidation scenarios. We will therefore discuss the factors that could limit Hyperliquid’s development in the future.

A Wave of Airdrops

• A New HYPE Airdrop:

Although Hyperliquid currently has no active points campaign, a second airdrop cannot be ruled out. With 38.9% of the supply reserved for future emissions and community rewards, this scenario is not unlikely and could even lead to a significant distribution.

The anticipation of such an event could bring a new wave of users who missed the first airdrop, maintaining substantial volume regardless of market conditions and ensuring a steady revenue stream.

Furthermore, since the first airdrop, Hyperliquid has launched several innovations: spot markets, staking, and most notably, HyperEVM. The latter will likely play a significant role in the eligibility criteria for a potential second airdrop, attracting new users deploying capital and providing valuable feedback to developers.

• Airdrops from the HyperEVM Ecosystem:

One of the major adoption catalysts for Hyperliquid, which is still somewhat overlooked by the community, is the potential airdrop distributions from projects built on HyperEVM. A relevant point of comparison might be Binance’s Launchpad, but its campaigns are highly predictable. Instead, Hyperliquid should be compared to Cosmos or Celestia.

For instance, it is possible that HYPE stakers will experience a wave of airdrops similar to what TIA stakers saw in early 2024. To recall, TIA’s launch was very similar to HYPE’s, featuring a lucrative airdrop. This was followed by market speculation about future airdrops for TIA stakers, driving a massive price surge from $2 to $14 between November and late December 2023.

Then, in January 2024, the wave of airdrops for TIA stakers began. The DYM airdrop triggered a major rally in TIA’s price, which rose from $11.7 to an all-time high of $21.1, an 80% increase driven by DYM and other airdrops from projects like MOV, SAGA, and ALT. This steady flow of airdrops not only propelled TIA’s price but also significantly increased the amount of TIA staked.

Now, consider this: Hyperliquid has already disrupted the industry with its record-breaking airdrop, strong stance against VC allocations, and commitment to avoiding questionable deals with centralized exchanges. As a truly community-driven token, HYPE is setting a new standard that all HyperEVM projects are likely to follow.

If these projects adopt HYPE’s model, they will likely allocate a significant portion of their token supply through airdrops. This could take the form of airdropping their tokens either to their protocol users or directly to HYPE stakers. Such a potential wave of airdrops could create strong buy pressure on HYPE, as investors seek eligibility by purchasing and staking HYPE tokens.

Tokenization with Unit

Unit is a key component of Hyperliquid’s ambition to become "The House of Finance," offering a fully integrated asset tokenization infrastructure within its ecosystem. Specifically, Unit allows users to deposit, trade, and withdraw native assets without relying on synthetic versions or wrapped tokens—a fundamental shift from existing models that depend on centralized bridges.

Bitcoin was the first asset natively tokenized via Unit, enabling Hyperliquid users to trade and utilize BTC on the platform. This feature was immediately well-received, and BTC has now become the second most traded asset on the platform after HYPE.

But this innovation doesn’t stop there. The recent acquisition of the ticker UETH suggests that a native Ethereum (ETH) integration could be imminent, paving the way for a deeper connection with the EVM ecosystem and attracting even more liquidity to Hyperliquid. If this trend continues, other major assets like SOL or native stablecoins could follow, strengthening Hyperliquid’s spot market and making the trading experience even more similar to centralized exchanges (CEXs).

Multisig and ON/OFF Ramp

Two additional features, highly requested by the community, could help Hyperliquid get closer to its vision of a "House of Finance."

First, the native integration of multisig wallets (already implemented) at Hyperliquid’s Layer 1 level sets it apart from most other blockchains, where this functionality is only available through smart contracts. This allows any account to seamlessly transition into a multisig account, significantly enhancing security.

With this feature, multiple wallets must collectively sign transactions for every action—whether it be trading, staking, validating, or other operations. This should be indispensable for all users and will also open the door to institutions and funds, which must use multisig accounts for their operations—a requirement that previously prevented them from using Hyperliquid.

The second feature, set to launch soon, is an ON/OFF-ramp solution allowing Hyperliquid users to deposit fiat directly onto the platform for trading and withdraw fiat seamlessly to their personal bank accounts. While this may seem like a minor addition, it significantly enhances Hyperliquid’s offering and improves user retention.

The Success of HyperEVM

On February 18, HyperEVM’s mainnet was officially launched by Hyperliquid. This launch surprised the community, as it was unexpected and occurred under less-than-ideal market conditions. Many criticized this move, calling it the team’s first major misstep. The main concern was that launching a network without informing developers, with minimal activity and few applications built, does not create an environment conducive to attracting users.

However, upon closer analysis, this decision might not be as bad as it seems. It ensures that all developers start on an equal footing from day one—with no pre-arranged deals or exclusive support from the team. This approach fosters a fair and competitive environment, encouraging organic development and innovation within the ecosystem.

The token used to pay gas fees on HyperEVM is HYPE. As the network grows and more dApps are deployed, on-chain activity should increase significantly. This growing demand will push more users to buy and hold HYPE to cover transaction fees, ultimately supporting price appreciation as adoption scales.

As shown in the ecosystem mapping (presented earlier in this research), a growing number of promising projects are being built on HyperEVM. However, TVL has struggled to take off (around $25 million at the time of writing) and major applications still register low activity.

It is crucial to understand that tremendous expectations have been placed on HyperEVM. While Hyperliquid’s success as a DEX does not directly depend on it, if HyperEVM fails to prove its technical superiority and attract a strong ecosystem, it risks becoming an underutilized byproduct, weakening HYPE demand and Hyperliquid’s ambition to become the on-chain trading standard.

(De)centralization

One of the most frequently cited criticisms of Hyperliquid is its high level of centralization. From a technical standpoint, the blockchain still operates with a small number of validators (only 16 as of now), all directly selected by the team. This setup presents two major issues:

• Censorship risk: With such a small validator quorum, a handful of participants could theoretically manipulate transaction ordering, block certain users, etc.
• Lack of true permissionless staking: Unlike more open models (such as Ethereum), Hyperliquid does not yet allow users to delegate their tokens to independent validators.

The team has announced a gradual opening of validation, but without a clear timeline. Until this issue is resolved, Hyperliquid remains vulnerable to criticisms regarding its lack of decentralization.

A Regulatory Risk?

By offering leveraged trading without KYC, Hyperliquid could quickly attract regulatory scrutiny. Its model resembles that of a non-regulated centralized platform, featuring leverage levels up to 50x and a redistribution of trading fees to users via HLP and the Assistance Fund.

If Hyperliquid becomes "too big to ignore," it could face bans or access restrictions in several jurisdictions. A scenario where major countries like the U.S. or the EU restrict access to the platform cannot be ruled out—especially if significant trading volumes start shifting to Hyperliquid at the expense of regulated platforms.

Tier 1 CEX Listing

A potential growth driver for HYPE’s price is its listing on major centralized exchanges (CEXs). Since Hyperliquid deliberately avoided CEX deals for an early listing, these exchanges would be forced to buy HYPE on the secondary market, like any other investor.

As a result, HYPE is still not listed on most Tier 1 CEXs, including Coinbase, Binance, Bybit (already in Perps, not yet in Spot), and Kraken. This has several important consequences for Hyperliquid:

• Liquidity plays a crucial role in determining fair value—the more liquid and accessible an asset is, the more likely it is to trade at its true value.
• Accessibility is just as important, as most traders still operate on CEXs. If a token is not easily available on major platforms, potential buyers simply cannot access it, regardless of demand.

The real question is whether CEXs will be willing to list a direct competitor, knowing that doing so would directly benefit HYPE.

What About a Bear Market?

Hyperliquid operates a unique economic model, where 100% of generated revenue is reinvested into HYPE (via the Assistance Fund and HLP). This system works as long as trading volumes remain high and HYPE’s value holds up. However, several scenarios could put this model under pressure, including:

• A crisis of confidence in Hyperliquid
• A misalignment of incentives between users and the protocol
• A prolonged bear market

The worst-case scenario is a prolonged bear market. If trading volumes decline significantly, fee-based revenues will shrink—and since fewer fees mean fewer HYPE buybacks, Hyperliquid’s core economic thesis would be seriously challenged.

This section was written by the GL Capital team. The detailed analysis is available in their thread on X, and we encourage you to check it out and support their work by following them there.

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Final Thoughts

In just two years, Hyperliquid has established itself as a leader in decentralized trading, bridging the gap between CEXs and DEXs for the first time. Unlike projects reliant on speculation or VC funding, Hyperliquid has built a profitable and self-sustaining platform with a durable model.

From a valuation perspective, the model presents an asymmetric risk/reward opportunity. Despite a conservative assessment, the growth potential remains attractive, with HYPE’s fair value estimated between $32 and $49.

However, several key milestones must still be met to validate this thesis. Centralization remains a concern, with only 16 validators, and the lack of transparency in the codebase could deter third-party developers. While full control over the infrastructure is a powerful model, it also exposes the platform to vulnerabilities, as demonstrated by the HLP incident.

The development of HyperEVM will also be a crucial factor. If the ecosystem struggles to gain traction, Hyperliquid’s long-term growth and investor confidence could be compromised. Additionally, its reliance on trading volume means that a prolonged bear market could temporarily pressure Hyperliquid’s economic model.

Despite these uncertainties, execution is key. Hyperliquid has one of the most competent teams in the industry, already proving its ability to innovate and deliver an industry-leading product. If HyperEVM successfully attracts developers and liquidity, it could become the driving force that propels Hyperliquid into the upper echelon of the crypto industry—and we believe the team has what it takes to make it happen.

We are making this research freely accessible to help the community better understand the key aspects of Hyperliquid. If you would like to support our work, you can use our referral link (code OAKGLC) to sign up on Hyperliquid. This costs you nothing but helps us continue producing high-quality content.

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Disclaimer

This research note has been prepared based on GLC & OAK’s current market outlook and convictions regarding the cryptocurrency market. It is critical to emphasize that investing in cryptocurrencies and digital assets involves significant risk due to their inherent volatility and unpredictability.

The information provided here is for educational and informational purposes only and should not be interpreted as financial or investment advice. Market trends and projections are subject to change due to unforeseen events, and short-term volatility may lead to substantial price fluctuations.

We strongly encourage you to perform your own due diligence and research before making any investment decisions. Nothing in this document should be considered an endorsement to buy or sell any particular asset. Never invest more than you are willing to lose and ensure that you fully understand the risks associated with this market.

GLC & OAK assumes no responsibility for any losses incurred as a result of using this information.

The authors of this piece might hold some tokens mentioned in the research. However, the report was written in an unbiased way, without influence of any kind. We uphold ourselves to the highest standards in order to provide the best research possible.

The article might contain referral links that benefit both GLC & OAK Research.