Forwarding the original title “Foresight Ventures Depth Analysis of Hyperliquid’s Success Path, Insights into the Next Wave of on-chain Infrastructure”

In 2024-2025, Hyperliquid is rising at an astonishing speed, becoming a major on-chain liquidity hub. Its total open contract amount has surpassed $10.1 billion, with USDC locked amount exceeding $3.5 billion. Whales like James Wynn are showcasing their skills here, leveraging billions of dollars in positions with 40x leverage, driving market sentiment and harvesting liquidity. Meanwhile, the launch of HyperEVM further expands the ecosystem, attracting multiple innovative projects to settle in.

Today, we will delve into two key issues:

• How did Hyperliquid rise?
• What are the notable ecological projects on HyperEVM?

How did Hyperliquid rise?

Hyperliquid is a high-performance decentralized exchange (DEX) focused on spot and perpetual contract trading, and it has launched HyperEVM, an EVM L2 on Hyperliquid. Most people became aware of Hyperliquid from the massive airdrop in November 2024; before that, many considered it just an ordinary perp dex. Later, people gradually came to understand what makes Hyperliquid special.

Technology:

• A decentralized trading platform without KYC, but with the experience of a CEX: Hyperliquid does not require users to undergo KYC verification, allowing users to trade anonymously, attracting privacy-conscious traders and institutions sensitive to regulation. Hyperliquid offers a CEX-like user experience (speed, UI/UX) without the need for identity verification, lowering the entry barrier.

Product:

• Low fees, high leverage: Market making fee 0.01%, taker fee 0.035% (can be as low as 0.019% for large clients). Supports 50x leverage, far higher than most DEXs (such as dYdX’s 20x).
• High-yield HLP Vault: HLP offers an annualized return of 14%-24% by participating in market making and liquidation profits through depositing USDC, attracting DeFi users seeking stable returns. The community-oriented design of HLP (no team cuts) further enhances user trust.
• Community-oriented and deflationary mechanism: all fees are allocated to the community (HLP and Assistance Fund), rather than to the team or insiders, enhancing decentralization attributes. Buybacks and burns effectively reduce circulating supply, supporting long-term value growth.

Marketing:

• High Ratio Airdrop and Wealth Effect: The 31% HYPE airdrop (310 million tokens, valued at 1.2 billion USD) in November 2024 is one of the largest airdrops in crypto history. The airdrop is based on user trading volume and referral points, incentivizing early users to participate and enhancing loyalty. HYPE price skyrocketed from 3.9 USD to 27 USD (with a peak of 34.96 USD), creating a significant wealth effect that attracted more users to join.
• The whale effect and attention economy: Hyperliquid’s opening position information is transparent; however, this transparency coexists with manipulation. On one hand, the on-chain data publicness makes whale positions visible, allowing retail investors to track the movements of smart money; on the other hand, whales use this transparency to manipulate the market in reverse. For example, traders like James Wynn use Hyperliquid’s high leverage (40-50 times) and transparency to publicly disclose large positions (such as a $568 million BTC long position), attracting follow-on funds and creating a positive feedback loop of “position-emotion-price.”

Economic Model:

• Income Closed Loop and Deflationary Mechanism: Platform income is returned to token holders or ecosystem participants through methods such as buybacks, burns, and dividends. This creates a positive cycle of “increased usage → increased income → increased token value.”

Hyperliquid’s main revenue sources come from platform fees and HIP-auction fees.

• Platform fees: including fees for spot and perpetual contracts (maker fee 0.01%, taker fee 0.035%, users with high trading volume can enjoy a rate as low as 0.019%), funding rates, and liquidation fees.
• HIP-1 Auction Fee: New tokens listed under the HIP-1 standard are required to pay an auction fee, which will all go to the Assistance Fund.

Transaction fees are allocated to HLP and the Assistance Fund.

• 46% allocated to HLP depositors as market making and liquidation profits.
• 54% goes to the Assistance Fund for HYPE buyback and burn.

The dual deflationary mechanism (buyback + burn) enhances the value stability of HYPE.

• The Assistance Fund regularly uses the accumulated USDC to repurchase HYPE in the secondary market, creating sustained buying pressure.
• In spot trading, the HYPE portion of the HYPE-USDC trading pair is directly destroyed, reducing the circulating supply.

Many projects want to emulate this model, but it is actually not suitable for most projects because they do not meet the prerequisites required for this model. 1. Insufficient revenue. The vast majority of projects have an annual revenue of less than 1 million dollars, and even if the return ratio reaches 100%, it has a limited impact on the token price. 2. Most projects’ tokens lack supporting use value. 3. No cost structure advantage. HyperLiquid, as a derivatives platform, has marginal costs lower than DeFi projects that require large liquidity mining subsidies.

Ecosystem:

• HyperEVM, as the EVM-compatible L2 of Hyperliquid, attracts DeFi projects to migrate, forming a diverse ecosystem of derivatives + lending + Meme.

Overall, the rise of Hyperliquid is the result of multiple factors: technology (no KYC, near CEX trading experience) + product (low fees, high leverage, high yield HLP vault) + marketing (large airdrops, whale effect) + economic model (revenue closed loop, buyback deflation) + ecosystem (HyperEVM). Its marketing strategy and economic model design are particularly worth learning from. However, two major risks need to be vigilant: 1. Regulatory pressure: In an increasingly strict compliance environment, the no KYC model may face significant challenges. 2. Cycle test: The revenue structure is sensitive to market activity, and the sustainability of the business model in a bear market environment still needs to be verified.

What are the noteworthy ecological projects on HyperEVM?

As of May 31, 2025, data from DefiLIama shows that the HyperEVM ecosystem’s TVL reaches $1.8 billion, covering sectors such as lending, DEX, and Meme.

(Data from DefiLIama:https://defillama.com/chain/hyperliquid-l1）

1. HyperLend

HyperLend is a lending project on HyperEVM, with a TVL of 370 million USD, making it one of the top projects on HyperLiquid and one of the three essentials of DeFi. Website:https://hyperlend.finance/

Currently, a large amount of wstHYPE and WHYPE is being staked on HyperLend to earn interest. However, since the HyperEVM ecosystem is still in its early stages, the overall borrowing demand is relatively low, resulting in temporarily low lending APR. As more applications are launched, the user base expands, and leverage demand increases, borrowing demand is expected to rise, thereby boosting lending APR.

HyperLend’s lending framework has a three-layer lending architecture that is flexible and emphasizes risk isolation. It supports both pool-to-pool and peer-to-peer models. Distribution:

• Core Pool: Multi-asset shared liquidity, suitable for regular lending scenarios;
• Independent Pool: Contains only two types of assets to achieve risk isolation and prevent cross-asset risk spread;
• Peer-to-Peer Pool: Borrowers and lenders match directly, allowing for customizable interest rates and terms, with rates typically being higher.
• And supports flash loans: no collateral, repayment within a single block, supports high-frequency arbitrage and liquidation.

After users deposit assets, they will receive yield tokens (hTokens), which represent their principal deposit plus accrued interest. The accounting positions are tracked through debt tokens (DebtTokens), which accumulate interest over time, ensuring that the process is transparent and traceable.

In addition, HyperLend collaborates with HyperLiquid, allowing users to borrow additional assets using hHLP as collateral and earn interest, thereby enhancing the efficiency of HLP fund utilization and providing users with additional returns.

HyperLend has established partnerships with multiple DeFi projects, including RedStone, Pyth Network, ThunderHead, StarGate, and Theo Network, enhancing its interoperability and influence within the Hyperliquid ecosystem.

HyperLend has launched a points reward program where users can earn points by using the protocol, which may lead to token airdrops in the future.

2. Hypurr Fun

Hypurr Fun is a meme launch platform on HyperEVM, providing a Telegram bot and web interface for users to quickly perform transactions, making it a major traffic entry point on HyperEVM. Website:https://hypurr.fun/

The main features are:

• One-click issuance and trading: Users can easily issue new tokens through the bot and participate in trading.
• Advanced trading tools: Supports TWAP (Time Weighted Average Price), automatic sniping, and portfolio management features.
• Buyback mechanism: All transaction fees will be used to repurchase $HFUN tokens to enhance their market value.
• Community Interaction: Provides social features such as Whale Chats to facilitate communication among users.

$HFUN is the native token of Hypurr Fun, with a maximum supply of 1 million tokens.

3. HyperSwap

HyperSwap is a low-slippage AMM on HyperEVM.

The main function is:

• Token Trading: Supports the exchange of multiple tokens, providing a fast and low-slippage trading experience.
• Liquidity Provision: Users can create and manage liquidity pools to earn trading fees and platform rewards.
• Token issuance: Allows users to issue their own tokens in a permissionless environment.

HyperSwap adopts a dual-token model, consisting of $xSWAP (liquidity mining token) and $SWAP (governance and profit-sharing token). Users earn $xSWAP by providing liquidity and can convert it to $SWAP to participate in platform governance and profit distribution.

In addition, HyperSwap has launched a points program where users can accumulate points through activities such as trading, providing liquidity, and issuing tokens.

Summary

The rise of Hyperliquid is the result of multiple factors such as technology, product, marketing, and economic model. Particularly noteworthy are its marketing strategy and economic model design. However, it is important to pay attention to two risks: regulatory pressure and cyclical testing. The HyperEVM ecosystem is currently in its early stages and is rapidly developing.

Statement:

1. This article is reprinted from [ForesightNews]，Original title: “Foresight Ventures Depth Interpretation of Hyperliquid’s Path to Success, Insights into the Next Wave of on-chain Infrastructure Wave”, copyright belongs to the original author [ Maggie @Foresight Ventures], if there are any objections to the reprint, please contactGate Learn TeamThe team will handle it as quickly as possible according to the relevant procedures.
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