Hyperliquid is a high-performance Layer 1 blockchain designed to power a fully onchain open financial system, most notably the largest decentralized exchange for perpetual futures trading. Launched in 2023 by Jeff Yan and a team of former traders from Chameleon Trading, Hyperliquid addresses the traditional trade-off between centralized exchange speed and decentralized exchange self-custody. The platform processes trades with centralized exchange-level performance while maintaining complete transparency and user control through its purpose-built blockchain architecture.
The Hyperliquid ecosystem consists of two primary components: HyperCore, the native order book system for perpetual and spot trading, and HyperEVM, an Ethereum Virtual Machine-compatible smart contract platform launched in early 2025. This dual architecture enables the blockchain to handle over 200,000 orders per second with sub-second finality while supporting a growing ecosystem of decentralized applications. The native HYPE token, distributed to over 90,000 users in November 2024 through a genesis airdrop event, serves as the backbone for staking, governance, and network security.
Key Characteristics
- Consensus Mechanism: Hyperliquid uses HyperBFT, a custom Byzantine Fault Tolerant consensus algorithm inspired by HotStuff and its successors. The network operates on delegated proof-of-stake where validators produce blocks proportionally to their total staked HYPE tokens. Validators must maintain a minimum self-delegation of 10,000 HYPE to remain active, and the validator set evolves in epochs of approximately 90 minutes.
- Transaction Speed: The blockchain achieves sub-second finality with theoretical throughput of 200,000 orders per second. Block finalization occurs through a three-round voting process where validators reach consensus, ensuring robust security while maintaining exceptional speed optimized for high-frequency trading environments.
- Native Order Book: Unlike most decentralized exchanges that use automated market makers, Hyperliquid implements a fully onchain Central Limit Order Book that records all buy and sell orders directly on the blockchain. This approach mirrors centralized exchange functionality, offering reduced price slippage, traditional order types like limit and stop-loss orders, and complete market depth transparency.
- Native Token: HYPE is the native token with a total supply of 1 billion tokens and a circulating supply of approximately 334 million. The token serves multiple purposes including governance participation, validator staking to secure the network, and gas payments for advanced smart contract interactions on HyperEVM. As of November 2025, HYPE maintains a market capitalization exceeding $14 billion.
- Transaction Costs: Trading on Hyperliquid does not incur traditional gas fees. Instead, the platform charges maker fees up to 0.01% and taker fees around 0.035%. All trading revenue is directed back to the community through the Hyperliquidity Provider vault and assistance fund rather than being retained as profit.
- Dual Execution Layer: The blockchain splits state execution into HyperCore for native perpetual futures and spot order books, and HyperEVM for general-purpose smart contracts. This architecture allows developers to build sophisticated financial applications with full EVM compatibility while accessing deep native liquidity through precompiles and system contracts.
- Zero-Gas Trading: The exchange layer operates without requiring users to pay blockchain gas fees for trading operations, making the platform accessible and cost-effective. Users only interact with standard trading fees, which are significantly lower than traditional DeFi protocols.
- Application-Specific Design: Hyperliquid was purpose-built as an application-specific blockchain with resources optimized specifically for high-demand trading, eliminating competition for network resources that occurs on general-purpose chains hosting thousands of applications.
Network Architecture
Hyperliquid's technical architecture represents a ground-up optimization for financial applications, combining custom consensus with dual execution environments. The HyperBFT consensus mechanism operates through leader-based block production where transactions are compiled into blocks and broadcast to network validators. Validators cast votes across multiple rounds, requiring at least two-thirds approval before block finalization. This three-round process includes quorum certificates confirming validator consensus and timeout certificates handling potential communication failures or malicious behavior. The validator set refreshes every 100,000 consensus rounds, approximately 90 minutes, ensuring dynamic participation while maintaining network stability.
The execution layer divides responsibilities between HyperCore and HyperEVM, creating a unique hybrid architecture. HyperCore handles margin calculations, order matching, and liquidations entirely onchain without relying on off-chain order books—a core design principle ensuring full decentralization through consistent transaction ordering via HyperBFT consensus. The networking stack and consensus algorithm were optimized together from first principles to support the L1's unique performance demands.
HyperEVM integration enables developers to deploy Ethereum-compatible smart contracts that directly interact with HyperCore's spot and perpetual order books through specialized precompiles and system contracts. This architecture means newly launched protocols instantly access institutional-grade liquidity without bootstrapping separate reserves or integrating external DEXs. Smart contracts can read prices directly from order books and execute liquidations against guaranteed deep liquidity, enabling capital efficiency improvements of 20-25% compared to traditional DeFi protocols that maintain safety buffers.
DeFi Ecosystem
The HyperEVM ecosystem has rapidly evolved into comprehensive DeFi infrastructure with over $1.5 billion in total value locked across 100+ projects as of mid-2025. The ecosystem's growth accelerated following HyperEVM's mainnet launch, expanding from Hyperliquid's core exchange to encompass lending protocols, liquid staking platforms, stablecoin systems, and memecoin launchpads. Major protocols include Hyperlend for real-time leverage lending with dynamic interest rates, Timeswap offering oracle-free fixed-term lending, Felix Protocol enabling feUSD minting with crypto collateral, and Morpho providing customizable peer-to-peer and pool-based lending with over $4 billion TVL.
The platform's Total Value Locked surged from $2.1 billion at the start of 2025 to over $5 billion by Q3 2025, with the broader ecosystem capturing 73% of decentralized perpetual trading volumes. Notable infrastructure projects include Hyperdrive for DeFi lending and liquid staking, Theo for cross-platform liquidity, and HypurrFun as a memecoin launchpad. The Hyperliquidity Provider vault serves as the ecosystem's cornerstone, providing liquidity for market-making and processing liquidations while distributing trading fee revenue back to depositors. The exchange processes over $2.6 billion in daily trading volume across 145+ trading pairs, generating over $1 million in daily fees.
HyperCore's native liquidity creates unique advantages for ecosystem protocols. Lending platforms can offer 90%+ loan-to-value ratios instead of the typical 75% because liquidations execute against guaranteed deep liquidity, eliminating execution risk buffers. This unified liquidity layer means every DeFi protocol gains institutional-grade execution capabilities with full transparency and composability, regardless of the protocol's age or size.
Getting Started
Prerequisites
Before using Hyperliquid, you'll need a compatible Ethereum wallet such as MetaMask, Ledger hardware wallet, or other Web3 wallets that support EVM chains. For trading on the exchange, you'll need funds to deposit, and for interacting with HyperEVM applications, you'll need HYPE tokens to pay for smart contract transactions. The primary bridge operates from Arbitrum, so having funds on Arbitrum facilitates easier onboarding.
Setting Up
- Set up a compatible wallet: Install MetaMask or connect your Ledger hardware wallet. Hyperliquid supports standard Ethereum wallets, and Ledger now offers native HYPE token support within Ledger Wallet for secure management.
- Bridge assets to Hyperliquid: Visit the official Hyperliquid platform and use the native bridge from Arbitrum to transfer USDC or other supported assets. The bridge is integrated directly into the platform for streamlined onboarding.
- Add Hyperliquid network to your wallet: The platform will automatically prompt you to add the Hyperliquid network to your wallet. Alternatively, you can manually add the network using the official RPC endpoints found in the documentation.
- Obtain HYPE for gas fees: If you plan to interact with HyperEVM smart contracts, acquire HYPE tokens through the spot exchange or swap features. Note that trading on the main exchange does not require HYPE as no gas fees are charged for standard trading operations.
- Explore the ecosystem: Start with the main exchange for perpetual or spot trading with zero gas fees, deposit into the HLP vault for passive liquidity provision, or explore HyperEVM DeFi protocols like Hyperlend, Felix Protocol, or other applications.
Quick Tips
- Trading on Hyperliquid's main exchange incurs zero gas fees, only standard maker/taker trading fees
- The HLP vault offers passive income opportunities by providing liquidity for market-making
- Use Ledger hardware wallets for maximum security when holding HYPE or interacting with the ecosystem
- Start with smaller positions to familiarize yourself with the platform's perpetual trading mechanics before using high leverage
Fees and Economics
Hyperliquid employs a unique fee structure that distinguishes between exchange trading and smart contract interactions. Trading on the main exchange incurs zero blockchain gas fees—users only pay standard trading fees with maker fees up to 0.01% and taker fees approximately 0.035%. This structure makes Hyperliquid significantly more cost-effective than traditional DeFi platforms where gas fees can exceed trading fees during network congestion. The platform generates substantial revenue, with annualized fees exceeding $1 billion as of November 2025 and cumulative fees surpassing $526 million.
Unlike conventional exchanges that retain trading fees as profit, Hyperliquid follows a community-driven model where all revenue returns to ecosystem participants. Trading fees are directed to the Hyperliquidity Provider vault, which distributes them to liquidity providers, and a separate assistance fund. This circular economy ensures that active participants capture value generated by platform activity. For HyperEVM smart contract interactions, users pay gas fees in HYPE tokens, though these costs remain minimal compared to congested networks like Ethereum mainnet.
The platform's economic model includes innovative mechanisms like vault systems where leaders must maintain stakes in their own vaults and earn 10% of generated profits, aligning incentives between vault managers and depositors. The HLP vault specifically accumulates value from multiple sources: liquidation proceeds, portions of platform trading fees, and market-making profits. This structure creates sustainable economics where the most active and valuable participants receive proportional rewards.
Security and Validators
Hyperliquid's security architecture centers on its HyperBFT consensus mechanism and delegated proof-of-stake validator system. The network launched staking functionality in December 2024 with an initial lockup of $8.4 billion worth of HYPE tokens distributed across validators. As of launch, the network operated with 16 validators, each required to maintain a minimum self-delegation of 10,000 HYPE tokens to remain active in the validator set. Validators produce blocks proportional to their total delegated stake and may charge commission to delegators, though commission increases are restricted to prevent exploitation of delegators.
The consensus mechanism provides robust security through a three-round voting process requiring two-thirds validator approval before finalizing blocks. Quorum certificates confirm sufficient validator agreement while timeout certificates handle potential Byzantine behavior or network failures. The validator set evolves dynamically in epochs of approximately 90 minutes, allowing for continuous network adaptation while maintaining stability. Users stake HYPE to validators based on metrics including uptime, commission rates, reputation, and community contributions, creating competitive incentives for validator performance.
Security considerations extend beyond consensus to include smart contract risks and bridge dependencies. While the platform undergoes regular audits, the HyperEVM represents a newer technology stack that hasn't been battle-tested to the same extent as established networks like Ethereum. User onboarding through the native Arbitrum bridge means platform security partially depends on Arbitrum bridge contract integrity. The platform employs a decentralized oracle system feeding real-time asset prices from major exchanges for margin calculations and liquidation triggers, introducing oracle manipulation risks that could lead to improper liquidations if compromised.
Use Cases
- Perpetual Futures Trading: Hyperliquid's primary use case centers on decentralized perpetual futures trading with centralized exchange-level performance. Traders execute leveraged positions across 145+ trading pairs with advanced order types including stop-loss, take-profit, cross-margin, and isolated-margin strategies while maintaining full self-custody of assets.
- DeFi Applications: The HyperEVM ecosystem supports diverse DeFi protocols including lending platforms like Hyperlend and Morpho, stablecoin systems like Felix Protocol's feUSD, and liquid staking solutions. Developers build sophisticated financial applications that leverage native order book liquidity for enhanced capital efficiency, achieving 90%+ LTV ratios compared to traditional DeFi's 75%.
- Liquidity Provision: Users provide liquidity through vault systems, particularly the HLP vault which serves as the protocol's market maker and liquidation processor. Vault depositors earn proportional shares of trading fees, liquidation proceeds, and market-making profits, creating passive income opportunities aligned with platform growth.
- High-Performance Trading Infrastructure: The blockchain serves as infrastructure for professional traders and institutions requiring low-latency, high-throughput environments. The platform handles over $2.6 billion daily trading volume with sub-second finality, making it suitable for algorithmic trading, market-making operations, and high-frequency strategies previously only viable on centralized exchanges.
Risks to Consider
Using Hyperliquid involves several categories of risk that users should carefully evaluate. Smart contract vulnerabilities represent the primary technical risk—while the platform undergoes audits, undiscovered bugs in HyperCore or HyperEVM contracts could be exploited, potentially resulting in loss of funds. The platform's dependency on the Arbitrum bridge for onboarding means security also relies on Arbitrum's bridge contract integrity, creating an additional attack surface beyond Hyperliquid's native code.
Network maturity risks stem from Hyperliquid being a newer Layer 1 blockchain that hasn't experienced the same prolonged stress-testing as established networks. Potential issues include unforeseen consensus problems, network instability, or temporary downtime that could halt trading or other critical functions during volatile market conditions. Market liquidity risks affect certain trading pairs where depth may not match the largest centralized exchanges, potentially causing slippage on large orders and resulting in worse execution prices than anticipated.
Oracle manipulation represents a specific concern for the decentralized oracle system providing real-time price feeds from major exchanges. These prices drive margin calculations and liquidation triggers—if oracles experience technical failures or manipulation, users could face improper liquidations even with adequate collateral. Finally, the platform faces regulatory uncertainty common to all DeFi protocols, particularly given its focus on perpetual futures trading which may attract increased regulatory scrutiny. A substantial token unlock event beginning in late November 2025 will release approximately 237.8 million HYPE tokens over 24 months, potentially creating significant selling pressure and price volatility.
