On Hyperliquid
She Hype my Purr till I Liquid
This is probably an extremely biased take on the L1-cum trading platform Hyperliquid. Given that a majority of my Crypto exposure is in $HYPE, not admitting that much would be stupid.
However, while I’ve avoided lev-longing the coin simply due to emotional bias, I would like to pen down some thoughts I’ve held for a looooOOOOOOooong time in terms of a long-term SPOT trade.
*Note: This is not a discussion about technical stuff or the underlying HyperBFT. I am too stupid to comment on those things and purely speculate about price cause I am a non-contributing member of society :0
A Token’s Texture
I, and many others, often shit on the “fundamentals” or “tokenomics” of many projects out there, largely due to their lack of PMF AND absurdly low valuations given to early investors.
While in TradFi, a successful exit for a venture round boils down to cashflow, crypto companies can simply launch a token willy nilly and extract gajillions from retail inflow. Simply put, (until recently) it was impossible to lose money in a seed round if you were a reasonably popular KOL/ Fund.
Hyperliquid and $HYPE broke the veil.
With no VC allocation, they airdropped the majority of circulating supply to natural users.
Although this is largely a good thing, it changes the texture of the token, or how it responds to certain market conditions.
Probably 70-80% of traders are unprofitable on a HTF. Fitted to crypto lev trading, that’s probably 90-95% unprofitable.
Anecdotally from funding rates, and to an extent HLP, most traders on HL are retail permabulls, with no regard for their sanity.
Funding rates are pretty directional and OI wicks are common on HL, especially on low-mid cap coins.
aka.
The way $HYPE airdropped was amazing, but also creates a positive (as in negative), reinforcing loop.
*Note: it’s probs. not reinforcing to the upside cause market has not trended up, and users do not have spare profits to buy more SPOT.
Quick reminder: in the early-mid days of HL, you got like INFINITE more points if you were liquidated (I know this from experience lmeow).
The final periods of Hyperliquid points incentive were also relatively extractive, with almost all points going to SPOT holders, which meant they were able to catch up extremely quickly with outsized capital vs. natural users.
Last point here is that $HYPE ATH was ~$34 and this was probably 30-40x the previous net worth of most traders. $HYPE OI is often high even when the rest of the market is down, leading to more lev long and therefore capitulation.
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For the unindoctrinated, a cool part of Hyperliquid is that they - wait for it - make money!
According to Defillama, HL has done ~USD $150m in cumulative fees since the start of 2025, averaging ~$40M a month so far.
All fees, including from the sale of SPOT tickers, are directed towards the Hyperliquid assistance fund and HLP.
The Hyperliquid assistance fund, which i will refer to as 0xfe, basically just TWAPs $HYPE with any spare cash it has.
Though buybacks have rarely been successful for a majority of tokens, $HYPE was supposed to be different, seeing as the platform had real revenues.
In fact, 0xfe has already accumulated close to 20 million $HYPE tokens, or 6% of circulating supply, purchased on the open market in 4, yes FOUR months.
The calculations here are my own and always skewed toward the lower end, but HL is projected to acquire 10-15% of all circulating $HYPE by EOY, given current revenues and token price ($40m/month, $12).
In reality, this will likely be accelerated given depressed bear market prices relative to ALL fees made. In fact, HL has already acquired >double of this model’s projections at the time of writing
*Note: I do not recall if 0xfe received $HYPE as part of the airdrop
Moreover, while stats are down across the board, volume still stays relatively high on HL, cornering the Perp Dex market despite a massive surge in competitors.
I expect fees to be relatively healthy going forward, especially when weighed against token prices. Invalidation of this would be volume dying up in bear market - but alas degens will be degens.
Note: Model is barebones, and have not calculated staking tier fees into it AT ALL, but would be interested in whether there is any offset there.
With the drop in Solana gambling, Hyperliquid is also THE definitive fee generator in all of crypto, outside stablecoins.
Now i could jump into all the P/E Ratio yada yada yada but we’ll save that for another day. They mean jack all in this timeline anyway. In fact, having actual revenues means that it’s easier to point a stick and go “haha revenue down” juxtaposed against things that generate zero value.
Risk Risk Risk
Now the downside of HL is that it’s a DEX. Fundamentally, it is built that way and should not be changed.
*Note: For this, I will ignore the centralization arguments, because it is centralized. But tbvhhhhh i don’t truly care about that and neither do most participants except for virtue signalling.
Code is Law
Trades / Accounts are Exposed
1. Code is Law
This has been a risk since day 1, but was recently actualized by the HLP exploiter.
Pretty good rundown here on ETH trade.
TLDR;
HLP forced to carry bad debt (Trader got liquidated for outsized position, no market to take opposite side)
HLP was supposed to lost ~$15M in one day, but hard coded the oracle price to leave them with small W and “bad actor” taking a loss - (not a good look tbh)
Compensated all those affected by the “bad actor”
While HLP technically won here, almost 60% of funds have been withdrawn from HLP since the two attacks.
Also i term “attacks” and “bad actor” in apostrophes because while they are morally wrong, code is law is law is law. What HL did here was for all intents and purposes a rollback of the chain.
Do i think that is good ? No.
Do i think that is bad? Also no.
It’s fine to punish a what is obviously a “bad actor”, but justifying that is hard, especially when objectively they chose to ignore other actors with possibly illicit funds in the past.
However, all teams have growing pains and I attribute this to be one of them. You do not simply build a $500m/year business, especially onchain, and expect to be problem-free.
The bigger issue is whether there are any other zero-day exploits available on the platform.
I also did not like their response- or at least their community’s response to a potential exploit in 2024. While the HL team was quick to act on it, pushing away people with the potential for public good (even if there is no vulnerability) is a net negative.
2. Trades are exposed
Dude just use insilico or smth
____
While the above are real risks, I think the three actual risks to HL, basically what would prevent them from moving to the next level, are all social risks.
a. HyperEVM (or a lack thereof)
b. Bruh these Maxis
c. Volume dries up
a. HyperEVM
When i was projecting for $50 $HYPE, one of the main risks (basically full invalidation of thesis and send it lower) was that HyperEVM would be unsuccessful.
Hyperliquid as a platform won because it achieved PMF through UI/UX. There have been plenty of perp dexes before, but the moment I used HL it just won.
However, the complexity and skill required to build a blockchain to house ALL OF FINANCE is much more difficult than that.
Layer that with the ceiling and floor of the ecosystem - basically whether those building HyperEVM’s first Swaps, Money Markets, etc, are able to replicate HL’s amazing experience and fit a need that users NEED and WANT.
*Note: I am like deceased at this point so this may devolve into rambling
So far, I’ve performed multiple scan throughs and DD’s on projects launched on EVM and have come up with nada. Sure, they are cool and all, but there is a lack of innovation that I would undoubtedly tie to building on HL.
There are two reasons i can attribute to this:
a1. The interesting projects have not come out yet (still building)
a2. There are simply no interesting metas at this time
Regarding a2, I refuse to believe it, but it may be true.
While I would love to long KRW on a weekend or trade synthetic stocks after hours, I’m not sure how ready our market is for that - or even if there is a market. Given that these products have not reached PMF post-Luna.
Given the current risk environment, there may also simply be low demand.
Silver lining: At current prices, I don’t think HyperEVM needs to succeed - it can grow a LOT slower and take its time.
b. Bruh these Maxis
I like Maxis but many of these Maxis are blindsided.
Yes, Jeff is amazing and Hyperliquid is an amazing product, but being a Maxi (you know what i mean) only scares people away and destroys the work of others trying to educate.
If you simply refuse to participate in other ecosystems because “muh token good”, honestly, dude, just relax.
Let the eco speak for itself.
But feel free to shit on ETH holders. Especially on ETH holders.
c. Volume dries up
This is more of a macro-economic risk that I am, once again, not smart enough to address.
However, this month will be very important in seeing whether perp volumes dry up post-HLP attack.
If there is a sharp drop-off, we’d likely need to adjust price targets lower for the medium term.
Muh Upside (the part u came for just scroll here)
I’m greedy so I’ll make this part into a Wishlist.
Firstly, let’s take into account that 38.888% of $HYPE is slated for future emissions and community rewards.
Benchmarked against 31% (airdrop), and we will see billions more in wealth created.
This is the “hidden points” that many are still yapping about, and I believe is more likely to be true than not.
Execution is more important. Will they prioritize current airdrop recipients or new eco participants? My money is on the latter and it will likely pay to interact on HyperEVM (I have not done this because bridging UX is kinda awful ngl feels like Avax X-C-P chain or wtv).
Secondly, there are a gajillion new projects on Hyperliquid, likely all sharing the same vision of “airdrop for the community”. IF they don’t feel poor after all this, we’ll likely see much more wealth being created for HL eco in the coming few months - just need one of them to kick it off.
Personally, I feel that Hyperliquid and HyperEVM are both being underexplored.
case study a: HLP
with 60% drawdown and precedence that HL team will defend HLP, you can get a MUCH more reasonable return than whatever that 3% APY was paying when the vault was stacked.
Contributing to their market making, something which the team heavily needs, will likely be a factor in the future as well given the points rotation from volume → technical users → SPOT.
Ofc, this carries risk, but buy when people are fearful or something right haha yeppies.
case study b: HyperEVM
As I said beforehand, HyperEVM is not the best to bridge to, and most long-term believers are simply staked.
Assuming points are equally distributed to stakers, do you think you could outperform the next guy’s size vs. interacting heavily with the ecosystem?
—segueway—
A Real Wishlist
Personally I want to see two things coming to Hyperliquid.
0xfe buys tokens below MA
SPOT Markets become more active
1. 0xfe buys tokens below MA (Moving Average)
Do I think it changes anything realistically? No.
I also have no idea what their true intentions are with 0xfe. But its just good optics.
2. SPOT Markets become more active
This has been my wish from day 1.
Onchain finance is SO segregated and there is not a place to run a portfolio if you want to operate outside of a CEX.
How cool would it be if I could operate a SPOT vault in a bull market or SPOT + Perps that runs a BTC.D indicator.
I think this should be the mid-term goal of HL, to run “all the coins” on Hyperliquid.
As someone who runs a few SPOT portfolios on excel + Coinbase, I think this would make me happy beyond belief.
Conclusion
As a natural user of Hyperliquid, it is hard not to be bullish on it.
Same way I was bullish on Solana and remain bullish on Bitcoin.
Furthermore, having real revenues at a fair valuation is hard to beat.
I often turn to Big Boy Buffet’s thoughts on cigar butts vs. value, and it’s safe to say that in a world full of cigar butts, I think that I’ve pretty much found value.
Short term price action is going to be painful, but it’s painful pretty much everywhere you look. Plus, there are tarded degen gambers who will nuke their airdrop for the chance to make it trading.
Regardless, I think that 0xfe’s cost price (~$11.7) is pretty much a nice point to properly accumulate, with perp volume dying as clear invalidation.
Chart wise, it looks pretty much doomed but the vibes of seeing people crashout in real time pretty much balances it out.
Anyway, have a good day and see you soon. Apologies in delay for the massive yap.
Oh, and come enjoy Hyperliquid if you’re not here yet.
his name was youssef kim