HYPE prices hit new highs again and again; a quick overview of the Hyperliquid ecosystem

Author: David C, Bankless analyst; Translation: Golden Finance xiaozou

Hyperliquid has recently become a presence that cannot be ignored.

HYPE has rebounded nearly 4 times from its all-time low, becoming the best performing asset among the top 100 tokens in the past month - with an increase of more than 110%. The ecosystem data is even more impressive: Hyperliquid now accounts for 70% of the trading volume of DeFi perpetual contracts, with a total transaction volume of US$1.5 trillion, and the ecosystem TVL has soared to US$1.4 billion - an increase of more than 100% this month alone.

Amid this explosive growth, Hyperliquid seemed to be on a global tour—it was all over Twitter, promoted on U.S. national television, featured on Bloomberg, and became the centerpiece of policy discussions. In other words, Hyperliquid’s momentum has accelerated significantly since we reported on it in January (weeks before HyperEVM went live).

To understand the reasons for its success, you need to first understand Hyperliquid's architectural design:

HyperCore is the exchange layer, which is the native perpetual contract DEX that established Hyperliquid's reputation and is responsible for handling all transactions, liquidity, and order book functions.

HyperEVM is a general-purpose EVM smart contract layer launched in February this year, allowing developers to build DeFi applications that can interact with the deep liquidity of HyperCore.

HyperCore can be thought of as the engine, and HyperEVM as the application that calls upon the power of that engine – together they make up the Hyperliquid blockchain.

With the structure clear, let’s delve deeper into Hyperliquid’s growth narrative.

1. HyperEVM has experienced explosive growth

Undoubtedly, HyperEVM has seen the biggest change since January.

Although development was slow in the early stages, HyperEVM’s growth has been explosive in recent weeks - daily on-chain transactions continue to hit new highs (recently breaking 300,000), over $250 million of HYPE has been cross-chained to the EVM layer, and more than 50 DeFi projects are actively building there. All of this was achieved without any ecosystem subsidies or incentive programs, which makes one wonder: why is yet another general-purpose EVM chain gaining such huge traction?

2. Explosion of application ecology

The answer seems to lie in its reliance on the exchange layer. HyperEVM provides developers with two unique ways to deploy applications:

Standard deployment: fully compatible with other EVM chains. Existing DeFi applications can be directly copied and pasted to run.

Native deployment: Smart contracts can read (and will soon support writing) exchange-level data in real time - including user balances, positions and real-time prices. Imagine that DeFi applications can directly access the order books of mainstream exchanges, which is exactly what this model achieves.

In the development of the ecosystem, I paid special attention to a protocol that takes advantage of this connection - Felix. This DeFi lending protocol includes two main markets:

CDP market: users can mint decentralized stablecoin feUSD by depositing collateral assets such as HYPE. The Vanilla market was also recently launched - a peer-to-peer lending pool built on Morpho. Instead of minting feUSD, users can directly lend or borrow tokens (including the upcoming HUSD, a stablecoin launched by Felix in partnership with the m0 Foundation).

CDP and Vanilla markets together provide users with flexible lending options - whether through the stability of fiat-pegged assets or the leverage effect of decentralized assets - while feeding value back to Hyperliquid's EVM and exchange layers.

Although HyperEVM’s DeFi ecosystem is far more than just Felix, there are also protocols such as Hyperlend, HypurrFi, and Morpho running through Morphobeat, but I would like to highlight three other projects:

HyperUnit (Unit for short): Unit provides a non-custodial tokenization protocol that enables cross-chain storage and access of assets on Hyperliquid L1. The assets packaged through this protocol can be circulated on both the HyperCore Exchange (for spot trading) and the HyperEVM (for DeFi applications). Among them, uBTC is active in multiple markets such as Felix as an important collateral asset.

PvP.Trade: Designed in the style of Runescape, PvP.Trade is a Telegram trading bot that turns trading into a multiplayer game. The product was launched in early 2024. Users can join teams and conduct spot or contract transactions through simple commands such as "/long" or "/short". They can compete against each other, follow teammates' operations, and compete for rankings. Its underlying layer is connected to Hyperliquid's deep liquidity through Builder Codes, allowing developers to connect to HyperCore without having to build from scratch.

Liminal: Liminal is a DeFi yield protocol that runs an automated delta-neutral strategy, operating both spot and perpetual contract markets. After the user deposits USDC, the system automatically handles strategy configuration, position management and rebalancing. The current 16% annualized return comes from charging funding fees to leveraged traders - not token incentives or inflation mechanisms. Currently an invitation code is required to participate.

3. HyperCore's continued dominance

Although HyperEVM grabbed the headlines, HyperCore's momentum has not diminished.

As mentioned above, various indicators at this exchange level continue to refresh historical peaks. The latest data shows: open interest reached 10 million US dollars, 24-hour fee income was 5.6 million US dollars, and cross-chain deposits of 3.5 billion US dollars of USDC were deposited.

In the past six months, Hyperliquid has been competing fiercely with the top centralized exchanges in perpetual contract trading volume - this is a miracle for a crypto-native platform with no external financing. Its speed of launching new products often surpasses that of its competitors, and the leveraged market of popular tokens is always launched much earlier than mainstream exchanges.

All of this activity drives HYPE price higher via daily fee buybacks. Since December last year, HyperCore has generated a total of US$240 million in fees, an average of US$40 million per month. More than 23 million HYPEs have been destroyed through daily repurchases, of which about 250,000 came directly from transaction fees. Based on the average handling fee over the last seven days, the auxiliary fund can theoretically buy out the entire circulating supply within seven years.

4. The popularity continues to rise

As the ecosystem continues to advance, the cohesion of the Hyperliquid community continues to increase.

X platform users signed their tweets as "Hyperliquid" and displayed the Hypio NFT avatar. To replace traditional subsidy incentives, grassroots organizations and localized communities such as HypurrCollective and HyperActive Capital have emerged, becoming a friendly entry point for new users to enter the ecosystem.

These preparations create the conditions for the upcoming HIP-3 upgrade - this upgrade will allow anyone to stake HYPE and create permissionless perpetual markets (i.e. tokenized stocks), greatly expand the platform's functionality, promote the process of full decentralization, and bring Hyperliquid closer to its vision of "accommodating all financial activities."

Overall, Hyperliquid’s success should warm the hearts of those backers who are tired of endless token incentives and frothy VCs. Although many people did come to mine HYPE in the early days, the continued usage after the airdrop and the constantly refreshed historical highs have proved that what ultimately wins is always the outstanding appeal of the product itself.

This growth model driven by real utility (not subsidies) - high usage, real income creation (current data is extremely impressive), and real community cohesion - is showing results. As the HIP-3 upgrade approaches, the highly cohesive community is actively writing a new chapter, and various data show that this is just the beginning.