Hyperliquid draws Wall Street comparison to Coinbase, Binance as DEX hype grows

Hyperliquid, a two-year-old decentralized exchange built by a small team of engineers, has become the newest fixation of both crypto traders and Wall Street after the historic $10 billion wipeout left investors ￰0￱ platform, designed for perpetual futures, has already outperformed Coinbase in certain areas despite being far smaller than it and Binance, handling volumes within an industry that now exceeds $6 trillion a month. Hyperliquid’s rise has been fast and messy, but that’s the kind of story that defines crypto’s ￰1￱ time backers Paradigm and Pantera Capital have both called it “a bet on digital finance’s future.” At a Coinbase summit, where executives from BlackRock and Coatue joined crypto insiders to map the sector’s next chapter, Jump Trading president Dave Olsen singled out Hyperliquid as “the first meaningful competitor” to ￰2￱ was co-founded by Jeff Yan and the pseudonymous “iliensinc.” Yan, a former Hudson River Trading trader, ran a crypto trading desk called Chameleon Trading before he went to build a system for raw speed, largely outside traditional oversight.

Hyperliquid’s front end blocks U. S. users, but anyone can trade directly ￰3￱ no-KYC setup mirrors earlier exchanges that eventually ran into regulators’ ￰4￱ Mt. Gox.

“The highest growth rates are in the newest and least established markets because most existing participants don’t understand why they exist,” said Tarun Chitra, founder of Gauntlet. Hyperliquid’s real edge is its Hyperliquidity Provider ( HLP ), an automated trading vault that acts as a counterparty using pooled user ￰5￱ more than $500 million in the system, its algorithms continuously post buy and sell quotes, guaranteeing someone is always on the other ￰6￱ Buchert of Wintermute called it “the fix to crypto’s chicken-and-egg problem,” since liquidity attracts traders and traders attract more ￰7￱ ah, there’s a ￰8￱ HLP sometimes trades against its users.

“When you run an exchange, you should set the rules, not play on the field,” said Vishal Gupta, a former Coinbase ￰9￱ code, however, records every HLP trade on-chain in real time; no hidden books, no custody of user funds. Still, the system has never undergone a third-party ￰10￱ last week’s rout, the HLP reportedly made $40 million while traders were wiped out. That’s when Hyperliquid’s auto-deleveraging system (ADL) kicked in, cutting into profitable positions to absorb ￰11￱ called its ADL rules “textbook aggressive.” But oh Jeff defended the mechanism, saying the HLP “does not pick profitable liquidations” and only appeared to have higher liquidation numbers because its data are public , unlike centralized exchanges that hide theirs.

Governance, token control, and the controversial JELLY incident If the HLP is the engine, the validators are the control ￰12￱ has only 24 validators, compared to Ethereum’s one ￰13￱ two-thirds of staked HYPE , its native token, is controlled by the Hyper Foundation, giving it serious governance ￰14￱ influence was tested during the JELLY incident, when a massive bet on an illiquid token threatened the HLP’s ￰15￱ voted to liquidate the position, and the Foundation reimbursed users with its own funds. Hyperliquid’s Jeff called it an “exceptional situation” that needed fast ￰16￱ some, that looked like a centralized intervention, the opposite of decentralization.

Hyperliquid’s financial model is just as ￰17￱ uses trading fees to buy back HYPE, fueling a loop where higher volumes push token ￰18￱ Assistance Fund, which handles the buybacks, has already built a $1.4 billion war ￰19￱ call it efficient, but skeptics like Santiago Roel Santos warn it’s “highly reflexive,” especially since it only works if trading activity keeps ￰20￱ Street money, massive upgrade, and looming regulatory attention Traditional finance is taking ￰21￱ backed an $888 million Nasdaq-listed fund to hold HYPE, giving institutions exposure without touching the ￰22￱ board includes Eric Rosengren, the former Boston Fed ￰23￱ Schamis of Atlas Merchant Capital, now CEO of that fund, said Hyperliquid is “like Coinbase and Ethereum combined,” claiming the company is already making over $1 billion in yearly free cash flow, with fewer than 15 ￰24￱ 100 projects are now building on the platform, according to DefiLlama, putting it in the same league as BNB Chain and Solana.

A new upgrade rolled out this week lets wealthy users launch their own perpetual futures markets in minutes, no listing committee ￰25￱ must stake millions in HYPE as collateral, and validators can slash funds if abuse is detected. It’s a high-risk, high-bar system that opens the door for any custom market, even one tracking ￰26￱ Labs recently told the ￰27￱ Futures Trading Commission (CFTC) that its perpetuals already meet, and sometimes exceed, ￰28￱ ￰29￱ from Jump Trading, seated beside CFTC acting chair Caroline Pham, said the project “is exposing gaps in the current regulatory framework.” Sign up to Bybit and start trading with $30,050 in welcome gifts