Analysis Perp DEX: Hyperliquid, Aster, Lighter, edgeX

Author: JV

Hyperliquid

This generation of Perp DEX is fundamentally different from the "GMX, DYDX" generation of Perp DEX. Because its core is still Perp DEX, the title still uses Perp DEX to discuss it.

Starting as "Perp DEX," it quickly rose to prominence.

Hyperliquid is an L1 public chain, just like Ethereum and Solana. Hyperliquid has a grand vision: to build a blockchain that supports all financial services and a high-performance on-chain financial transaction infrastructure. Hyperliquid offers both perpetual contract trading and spot trading, and has recently been developing the stablecoin USDH. Its development path can be glimpsed through its HIPs, from HIP-1, HIP-2, and HIP-3, with the community recently proposing HIP-4. HIP-4 aims to create "Event Markets" similar to Polymarket, further expanding Hyperliquid's product offerings. Simply put, it's a binary market traded on HyperCore. Unlike traditional perps, events don't rely on continuous oracles or funding; prices are entirely determined by trading behavior. This proposal was also affirmed by Jeff (the discussion about HIP is not expanded here; a dedicated research article will be written later.) Hyperliquid is also affectionately called by the community as “Binance on Chain”, a name that makes Binance executives a little anxious. Alternatively, Hyperliquid can be called “AWS of Liquidity”, which is a bit sexier.

Hyperliquid L1 Technical Architecture and Performance

The Hyperliquid team, based on "first principles", has developed a high-performance Layer-1 blockchain specifically for transactions in order to solve problems such as poor liquidity and trading experience, black box opacity, and fraud in the crypto market. The architecture is divided into two parts: HyperCore and HyperEVM. HyperCore is the on-chain matching engine, responsible for placing orders, matching, margining, and clearing orders on the Central Limit Order Book (CLOB), all completed on-chain. Hyperliquid was right to choose CLOB over an AMM. The previous AMM, Perp DEX, was a poor choice. CLOB is also a common choice among mainstream Perp DEXs. (Aster, Lighter, and edgeX also use CLOBs, with Aster offering both AMM and CLOBs.) HyperEVM is a general-purpose smart contract layer that shares consensus with HyperCore, maintaining compatibility with the Ethereum EVM and facilitating integration with other applications to exchange state. The consensus utilizes a modified HotStuff-based HyperBFT (Proof of Stake) to ensure consistent transaction order across the entire network without relying on off-chain matching. This tightly coupled sharding design delivers speeds approaching those of centralized exchanges: median transaction latency of approximately 0.2 seconds (99% of transactions <0.9 seconds), and peak throughput of up to 200,000 transactions per second (HyperLiquid official data). Hyperliquid's block generation and confirmation speeds are exceptional, achieving sub-second finality. With its fully on-chain order book and matching, Hyperliquid offers high transparency while maintaining exceptional performance, truly achieving "on-chain CEX speeds." Currently, Hyperliquid has not explicitly adopted EigenLayer's AVS (Active Verification Service) solution, relying primarily on its own blockchain and consensus to ensure performance and security. Performance and security are provided directly by its own blockchain, independent of the ETH restaking network. As of September 2025, Hyperliquid L1 had 24 active nodes. User Experience and Interface: Hyperliquid offers a trading experience consistent with leading CEXs. The user interface utilizes a traditional order book + candlestick chart design, supports advanced order types such as limit orders, take-profit and stop-loss orders, and offers professional trading tools. Transaction settlement is nearly real-time (sub-second), and the interface provides smooth, lag-free feedback. It meets the needs of both professional traders and retail investors. Incidentally, the "click" notification sound for opening and closing positions is very pleasant. Users can use a web3 wallet for permissionless access and non-custodial transactions, but this requires cross-chain bridging of assets to Hyperliquid L1. Currently, USDC can only be deposited via the Arbitrum chain. An agent wallet is then generated (with only trading permissions, no transfer permissions, and the private key is stored locally). Opening and closing positions does not require signatures, making the overall experience smooth. Users have no issues with this agent wallet. Hyperliquid maintains a strong community connection and a responsive approach. For example, in July 2025, after an API outage caused a brief outage, the team quickly compensated users for approximately $2 million in losses, demonstrating a commitment to rapid response and accountability. This has received positive feedback from users and widespread praise from the community. As a leading provider of perpetual swaps, Hyperliquid boasts exceptionally deep liquidity and trading volume. Its daily trading volume regularly reaches billions of dollars. In July 2025, its perpetual swap trading volume reached approximately $319 billion, pushing the total perpetual swap volume for the month to a record high of $487 billion. Hyperliquid alone accounted for approximately 65%. By mid-2025, Hyperliquid's market share had stabilized between 75% and 80%, far exceeding that of its competitors. In August 2025, perpetual swap trading volume accounted for 13.85% of Binance Futures, a historical high. (Data from The Block) The platform supports over 100 trading pairs, covering mainstream cryptocurrencies and long-tail assets, and listings respond quickly. Thanks to its on-chain order book model, users' order book depth and matching results are transparently visible. Coupled with the onboarding of professional market makers and the introduction of the HLP market making pool, Hyperliquid achieves extremely low spreads on major cryptocurrencies and low slippage for large trades. Its total value locked (TVL) is also significantly higher than that of its competitors: as of September 2025, the platform's TVL will be approximately US$2.7 billion. This massive pool of capital and depth enables Hyperliquid's contract market to boast trading depth and stable funding rates comparable to Binance across most currencies. The fee structure and incentive mechanism are similar to those of CEXs. Hyperliquid's base trading fees are 1.5bps for Markers and 4.5bps for Takers, which are generally slightly lower than those of mainstream CEXs. Currently, users who stake HYPE tokens can enjoy fee discounts of up to 40% (requires staking over 500,0000 HYPE), similar to how Binance ties BNB holdings to VIP levels. Vaults Hyperliquid's vaults consist of three components: AF, HLP, and User Vaults. Protocol Vault A: Assistance Fund (AF) The AF serves as the protocol's "treasury"/buying engine. This fund is primarily used to repurchase (and often burn) HYPE tokens; it is also used to compensate users in special events (approximately 2 million USDC was automatically compensated following the API outage on July 29, 2025). AF's assets are primarily HYPE, reducing slippage and execution complexity during large transactions and compensation. Approximately 93% of platform fees are allocated to this fund for the repurchase and destruction of HYPE tokens, with an additional 7% allocated to the HLP market-making pool. This design forms a positive cycle flywheel:Increased trading volume → Increased fee income → More tokens are repurchased and destroyed (increasing token value) and the market making pool benefits → Attracting more users and liquidity.

Data source asxn

Protocol Vault B: HLP (Hyperliquidity Provider)

HLP is positioned as a protocol-level market-making + liquidation backup (including the Liquidator component). Anyone can deposit USDC to participate in HLP's PnL distribution, with a current annual interest rate of approximately 6.7%. There are no management or performance fees (unlike user vaults). Deposits are redeemable four days after deposit. The HLP mechanism ensures open and transparent market-making liquidity, reducing the reliance on private agreements with market makers in traditional markets. User Vaults consist of Vault Leaders (managers who trade with their own strategies) and Depositors (investors who deposit funds and share PnL according to their share). This system is similar to the copy trading system used by secondary funds and CEXs. The Leader receives a 10% profit share (only when profitable), and the protocol treasury receives no commission.

Community Development and Team

Community Development:Hyperliquid has a highly active global community, with the European and American communities being stronger than the Chinese-speaking community. The official platform is highly active on social media platforms like X (Twitter), and has consistently held the top market share, creating a network effect in the perp DEX space. The heated community discussion is also reflected in the token's value. In November 2024, Hyperliquid airdropped 310 million of its genesis tokens, HYPE, to early adopters (31% of the total supply). Following the airdrop, HYPE's total market capitalization reached billions of dollars, reaping rich rewards for early community participants and establishing a strong reputation within the decentralized community. User growth is primarily driven by word-of-mouth and superior product acquisition, rather than excessive marketing. This is somewhat similar to Tesla. Team Background and Funding: Hyperliquid was founded by Jeff Yan, a Harvard graduate who previously worked at Hudson River Trading, a high-frequency trading firm in traditional finance. The core team consists of only approximately 11 people and is known for its small, elite team's rapid iteration. According to Jeff, the project has been entirely self-funded since its launch, rejecting venture capital investment to ensure independent decision-making and prioritize user interests. This "no VC, no private placement" approach has fostered community trust and enabled the team to focus on its technology and product. Most team members hail from world-renowned universities and leading technology and financial institutions, and the company has reportedly attracted several senior executives from traditional finance to its advisory ranks (including a former CEO of a major bank serving on the board). Market sources suggest Hyperliquid may have raised funds through affiliated listed entities, demonstrating its substantial financial strength (the platform's treasury holds over $500 million in reserves). Overall, the Hyperliquid team is low-key and pragmatic, leveraging their deep technical and trading background to achieve industry-leading status within two years. This background also explains their meticulous pursuit of product refinement and user experience. There are numerous discussions regarding the fundamental reasons for Hyperliquiqui's success, beyond the aforementioned factors of a well-organized team, exceptional product technology, and user experience. We can discuss this from the perspectives of “Tao” and “Shu”, and look at what Hyperliquid did right at different stages. Let’s first look at it from the perspective of “Shu”.

Phase 1: Airdrop Incentive

Before the HYPE TGE, there was an expectation of airdrops, and most users came to increase their trading volume to obtain points and airdrops. At this time, Hyperliquid did not receive much attention from mainstream CEXs and was not considered a competitor. Everyone believed that Hyperliquid would be like GMX and DYDX, and would remain obscure and untraded after the TGE. Phase Two: Compliance and Regulatory Dividends After the HYPE TGE, Hyperliquid's trading volume increased instead of decreasing, signaling a shift in sentiment. The consensus was that regulatory pressure was forcing mainstream CEXs, such as Binance, to operate in Europe and the United States. These lost users were taken over by Hyperliquid (as evidenced by the visitor distribution on the Hyperliquiquis website). Furthermore, some money exchanges, which struggled with KYC, also found a suitable tool. At this point, Binance, OKX, Bitget, and others considered Hyperliquid a competitor, and they took action to target it. (Traces of this can be found in the community, but won't be expanded here)

Phase 3: Build Codes - Channel Distribution is King

KOL rebates and affiliates are common user acquisition methods for CEXs. In addition to branding, PR, community, SEO, and campaigns, BD-driven KOL rebates are an essential growth path for CEXs and are very important. The proportion of users brought in by KOL rebates varies across CEXs, ranging from around 50% for Binance to around 70% for Bitget. Furthermore, smaller CEXs offer higher KOL rebates and a higher proportion of users and trading volume. Many small CEXs even offer rebates of 90%-100%, driving growth through the "flywheel" of "eating customer losses – subsidizing rebates." Hyperliquid's rebate is only 10%, and only applies to the first 1 billion in trading volume. At an average fee rate of 3bps, if someone you invite contributes 300,000 in fees, you'll only receive 30,000 in revenue. Rebate invitations aren't the focus of Hyperliquid; Build Codes is. Few people realize the true power of Build Codes; it's a distribution strategy with truly exponential potential. Developers no longer need to build high-performance order books or attract liquidity, as Hyperliquid provides the necessary infrastructure. Hyperliquid no longer needs to manage product promotion, user acquisition, or even product innovation, as all of this is delegated to the Builder Network. It's a bit like Perp DEX, a Swiss team I previously worked for (with UBS backgrounds), which used a white label approach. The direction was right, but unfortunately, the product wasn't very strong. Previously, Binance Broker and OKX's cloud exchange/nodes all used similar solutions. The essential difference with Build Codes is its ease of integration, low barrier to entry, and on-chain transparency. Currently, Phantom Wallet, Axiom, UXUY, and PVP.trade have all adopted this solution. Currently, Phantom has contributed approximately 40,000 new users, and PVP.trade has generated $7.5 million in daily revenue. At present, I have also completed the development of a basic version of perp DEX, and plan to use my previous experience and channel resources to grow. If you are interested, you can communicate with me.

In addition to Build Codes, there are also the killer CoreWriter and HIP-3, but the threshold is slightly higher, so I will not expand on them here due to space limitations. While the above analysis of the reasons for Hyperliquid's success is quite detailed, it doesn't capture the essence. Many interpretations of Hyperliquid's success remain superficial. The essence can be summed up in one sentence: Hyperliquid embodies the "Blockchain Spirit"—openness, transparency, decentralization, and user sovereignty. Just as Binance once carried this banner against traditional finance, BTC maximalists, industry veterans, and ordinary crypto users alike are all on Binance's side. What truly unites people is the true spirit of blockchain. From a user's perspective, many current CEX exchanges (CEXs) suffer from issues like centralized black boxes, customer losses, and trading against their users. From the perspective of CEX owners, they also face increasingly stringent regulatory compliance challenges. Consequently, many CEXs are turning to DEXs. Thus, Binance's crown prince, Aster, emerged.