Hyperliquid is one of the most interesting projects in the cryptocurrency market. Hyperliquid is attempting to build an on-chain financial marketplace where people can trade cryptocurrencies and other traditional financial assets. The long-term investment thesis around Hyperliquid is that financial markets could increasingly move onto blockchains, and Hyperliquid could become one of the platforms that captures that transition.
Hyperliquid initially became popular because of its decentralized perpetual futures exchange. Perpetual futures, commonly known as “perps”, allow traders to take leveraged long or short positions without owning the underlying asset and without the contract expiring. They have become one of the most important products in crypto, generating enormous trading volumes.
What is Hyperliquid?
What made Hyperliquid stand out was its attempt to combine the transparency and self-custody characteristics of decentralized finance with the trading experience of a centralized exchange. Rather than relying entirely on automated market makers, Hyperliquid operates an on-chain order book, allowing users to trade through bids and offers in a way that is more familiar to traditional traders.
Hyperliquid has become the dominant decentralized venue for perpetual futures, accounting for a large share of decentralized perpetual open interest and increasingly competing with centralized exchanges for global derivatives volume. The project is gradually moving beyond cryptocurrency derivatives and toward becoming a broader financial marketplace. Its HIP-3 framework allows developers to create perpetual markets linked to assets beyond cryptocurrencies, including equities, commodities and indices.
Instead of building an exchange that only allows people to trade Bitcoin, Ethereum and other cryptocurrencies, Hyperliquid is attempting to create infrastructure on which almost any financial market could potentially be represented. Traditional financial markets are fragmented. Stocks trade on stock exchanges, futures trade on futures exchanges, commodities have their own infrastructure and settlement occurs through a complex network of brokers, clearing houses, custodians and banks. Trading hours are also generally limited.
Blockchain technology offers the possibility of combining trading, collateral and settlement on the same infrastructure. A blockchain does not need to close at 4 p.m. New markets can theoretically operate 24 hours a day, seven days a week, and users anywhere in the world can potentially interact with the same liquidity pool. Hyperliquid is trying to build a high-performance version of that system.
Imagine being able to trade Bitcoin, an equity index, a commodity and eventually other financial assets through the same on-chain infrastructure, using the same collateral and with settlement occurring on the blockchain. That is a much larger opportunity than simply creating another cryptocurrency exchange. This is also why Hyperliquid’s expansion into real-world assets could be more important than its existing crypto trading business. If tokenized equities, commodities and other financial instruments become a significant part of global financial markets, an exchange capable of supporting those assets could potentially capture a much larger pool of trading activity.
There is already evidence that this transition is underway. HIP-3 markets have grown rapidly and now represent a meaningful share of Hyperliquid’s trading activity. The important question is whether this continues to develop from a crypto-native experiment into a genuine alternative financial market. This brings us to HYPE, Hyperliquid’s native token.
HYPE token
The most interesting characteristic of HYPE is its relationship with the economic activity generated by the protocol. Hyperliquid uses protocol fees to purchase HYPE through its Assistance Fund. Some of the tokens acquired through this mechanism are subsequently removed from circulation. This creates an economic relationship between activity on the platform and demand for the token. In simplified terms, the mechanism looks like this:
More trading activity → more fees → more HYPE purchases → potentially lower circulating supply → greater value accrual to HYPE.
This does not mean that HYPE is equivalent to a company’s stock. Token holders do not own Hyperliquid as shareholders own a corporation, and there is no guarantee that protocol growth will translate into higher token prices. Nevertheless, the structure is unusual in crypto because it creates a relatively direct connection between the activity of the underlying platform and the token. This is one reason institutional investors have started paying attention.
Chart: HYPE/USDT has been on the rise since its inception in November 2024
Institutional interest and investment thesis
One of the most notable examples is Stanley Druckenmiller’s Duquesne Family Office. Rather than buying HYPE directly, Duquesne disclosed a position in Hyperliquid Strategies (ticker PURR), a Nasdaq-listed company whose principal strategy is accumulating HYPE. Hyperliquid Strategies essentially provides investors with a traditional equity vehicle through which they can obtain exposure to the Hyperliquid ecosystem. The company’s strategy is to accumulate HYPE and increase its HYPE exposure per share.
An investor can theoretically benefit if Hyperliquid attracts more traders, generates more fees, increases HYPE purchases and expands its ecosystem. If the value of HYPE increases, the value of the company’s treasury can increase as well. If Hyperliquid attracts more traders, trading volume increases. Higher volume generates more protocol fees. Those fees contribute to HYPE purchases. A larger and more valuable ecosystem attracts additional developers and market makers, which can increase liquidity and make the platform more attractive to traders. More traders then generate more activity.
That is ultimately the most important part of the investment thesis. Hyperliquid does not need to replace the entire traditional financial system to become extremely important. Capturing a meaningful share of global derivatives trading, tokenized assets and other financial activity could already create a very large business.
There are also several reasons why the model is attractive from a technological perspective. Blockchain-based markets can potentially operate around the clock, settle transactions rapidly and make assets programmable. Developers can build applications directly on top of the trading infrastructure, potentially creating an ecosystem rather than a standalone exchange.
Chart: Hyperliquid Strategies Inc. (PURR) stock price made a new record high recently
What are the risks?
The first is competition. Centralized exchanges such as Binance and Coinbase already have enormous liquidity, user bases and institutional relationships. Other decentralized exchanges are also competing aggressively for derivatives activity. Hyperliquid therefore needs to maintain its technological advantage and liquidity if it wants to preserve its market share.
Regulation is another major uncertainty. The further Hyperliquid moves into equities, commodities and other real-world assets, the closer it gets to traditional financial regulation. Its ability to expand into major markets could therefore become an important determinant of its long-term growth.
Token supply is another consideration. HYPE has scheduled unlocks, meaning that new tokens entering circulation can create selling pressure. The buyback mechanism needs to generate sufficient demand to offset that additional supply if the token is to capture the full benefit of ecosystem growth.
How to get exposure to Hyperliquid?
The most direct way is to buy HYPE itself. This provides exposure to the Hyperliquid ecosystem but also carries the risks associated with holding a cryptocurrency including significant volatility, regulatory uncertainty, token unlocks and technological risks.
Another possibility is Hyperliquid Strategies, the Nasdaq-listed company associated with the HYPE treasury. The stock ticker is PURR. This provides exposure through a conventional equity security.
The key point is that Hyperliquid is becoming interesting for a reason that goes beyond its token price. The main thesis is that financial markets could move on-chain, and that an exchange capable of providing fast, liquid and always-on markets could capture a meaningful portion of that transition. If that happens, Hyperliquid could evolve from being a successful crypto derivatives exchange into something closer to an on-chain financial exchange with enormous potential gains for early investors. That is why the project has begun attracting attention from institutional investors such as Druckenmiller.
This article was written by Giuseppe Dellamotta at investinglive.com.