Hyperliquid didn’t rely on hype cycles or marketing blitzes to get into the spotlight. It designed a way to increase relevance and forced the cryptocurrency industry to reevaluate how far on-chain trading infrastructure has come.
What is hyper liquid?
At its core, Hyperliquid is a decentralized exchange (DEX) built specifically for perpetual futures trading. Unlike previous DEX platforms that relied on automated market makers and off-chain order matching, Hyperliquid operates a completely on-chain central limit order book, where trades, liquidations, and fund disbursements are recorded directly on the blockchain.
The design goal was simple but ambitious. The idea was to maintain non-custodial settlement while providing the execution quality, market depth, and responsiveness that traders expect from a centralized exchange. In practice, this meant replicating professional trading mechanisms on-chain rather than compromising on speed or price discovery.
who built it
Hyperliquid is developed by Hyperliquid Labs and led by Jeff Yan, a former high-frequency trader with experience at Hudson River Trading. Mr. Yang then ran a market-making business for cryptocurrencies, but after the collapse of FTX exposed the risks of centralized control in derivatives trading, he turned his attention to exchange infrastructure.
This project took an unconventional path from the beginning. Hyperliquid did not raise venture capital, instead choosing to self-fund its development. This decision shapes the platform’s governance structure, incentives, and long-term priorities, and centralizes control in the hands of builders rather than outside investors.
Where hyperliquid works
Hyperliquid runs on its own standalone Layer 1 (L1) blockchain, rather than Ethereum or any existing rollup. Users must bridge their assets (most commonly stablecoins such as USDC) to the network before they can trade. Once funds are deposited, trading actions are effectively gas-free from the user’s perspective, and fees are abstracted at the protocol level.
There is no central headquarters and no identification requirements. The number of validators is limited compared to older blockchains, reflecting a deliberate trade-off that prioritizes throughput and low latency over maximum decentralization.
Why traders paid attention
Hyperliquid’s rise coincided with a resurgence in demand for derivatives trading following the collapse of several centralized exchanges (CEXs). Traders want leverage without the risk of custody, and Hyperliquid has arrived, offering fast execution, low fees, and on-chain payments.
The platform’s interface and mechanics are familiar to experienced traders, reducing the learning curve that has historically slowed the adoption of decentralized exchanges. For many, this was the first on-chain venue that functioned more like a professional trading platform than an experimental alternative.
Liquidity and market share
Liquidity followed activity. Market makers stepped in, the order book deepened, and spreads narrowed. By 2025, Hyperliquid consistently accounted for the largest share of decentralized perpetual trading volume, often handling billions of dollars in daily operations.
HyperLiquid maintained its leading position in the decentralized perpetual market throughout the year, although volumes fluctuated in response to broader market conditions. At some points, the company’s futures trading volume reached double-digit percentages of Binance’s, and this comparison highlighted how the terrestrial decentralized infrastructure is paying off.
Token without the hype
HyperLiquid introduced its native token, HYPE, in late 2024 through a large-scale airdrop that primarily favored users rather than external investors. This token will be used for governance and network-level functions, and the protocol’s revenue will primarily go towards buybacks rather than rewards for inflation trading.
Although HYPE’s market performance was notable in 2025, the exchange’s growth was driven by trading activity and liquidity rather than incentive farming or emissions-based programs.
Stress test and technical inspection
The platform faced its first major stress test at the end of 2024. At this time, rumors of possible exploitation caused a wave of rapid withdrawals. No breaches occurred and transactions continued uninterrupted, reinforcing confidence in the system design.
In 2025, Hyperliquid occasionally encountered technical issues, including brief outages and API interruptions. Although these incidents did not result in permanent trading disruptions, they highlighted the operational challenges of running high-performance infrastructure completely on-chain.
Competitors enter the arena
Hyperliquid’s success has sparked intense competition. Established decentralized derivatives platforms such as DYdX and GMX remain active, while new generation Perp DEXs have been launched with incentive-driven strategies designed to capture volume.
DEX volume per December according to statistics from defillama.com. 30-day volume shows that Reiter and Aster are outperforming Hyper Liquid.
New entrants relied on trading rewards, zero-commission promotions, and airdrop speculation, sparking what became known as the “PERP DEX Wars” of 2025. As competition increased, Hyperliquid’s market share shrank, but it remained one of the largest decentralized criminal organizations due to its liquidity and open interest.
Why hyperliquid is the theme for 2025
Hyperliquid became a focus not because it eliminated competition, but because it changed expectations. This demonstrated that decentralized exchanges can support institutional-scale derivatives trading without relying on off-chain shortcuts or custody risks.
The platform’s self-funded model, subdued token footprint, and focus on infrastructure over incentives has made it a frequent reference in industry research and commentary throughout the year.
what happens next
By the end of 2025, Hyperliquid has evolved beyond a single trading venue. With a growing EVM compatible environment and an expanding ecosystem of third-party applications, the company has established itself as a trading infrastructure rather than a standalone exchange.
It remains unclear whether the company can maintain its lead as its competitors mature. But in 2025, hyperliquid forced the industry to recalibrate its assumptions. And in cryptocurrencies, changing the baseline is often more important than winning in the moment.
Frequently asked questions ❓
- What is hyperliquid?Hyperliquid is a decentralized exchange focused on perpetual futures trading on its proprietary layer 1 blockchain.
- Who founded Hyperliquid?The platform is led by Jeff Yang, a former high-frequency trader who built HyperLiquid after the failure of centralized exchanges exposed custody risks.
- Why did Hyperliquid gain traction in 2025?It combines centralized execution with on-chain payments and self-custody.
- Does Hyperliquid require identity verification?No, users can trade without KYC by depositing assets and connecting their wallets.
