Hyperliquid Review

Summary: Hyperliquid has overtaken dYdX, establishing itself as the premier decentralized exchange by leveraging its advanced Hyperliquid L1 blockchain for quick, on-chain transactions. Offering an extensive array of over 122 cryptocurrencies, including major assets and altcoins, and providing up to 50x leverage, it's designed to democratize crypto trading for its rapidly growing community of over 101,000 users.

Hyperliquid distinguishes itself with user-centric features such as self-custody, one-click trading, and Hyperliquid Vaults for copy trading, all underpinned by a transparent fee model that returns value to its users, thereby enhancing engagement and fostering a robust trading ecosystem.

What is Hyperliquid?

Hyperliquid is a decentralized order book perpetual futures DEX that rivals top centralized exchanges (CEXs) by operating fully on-chain. It's powered by the Hyperliquid L1 blockchain, utilizing Tendermint for quick consensus. This setup enables every action—orders, cancellations, trades, and liquidations—to occur transparently on-chain, achieving under one-second block latency and supporting up to 20,000 orders per second.

Surpassing dYdX to become the most popular decentralized perpetual exchange, Hyperliquid boasts over $1 billion in daily trade volume, more than 101,000 users, and 122 tradable assets. Its commitment to democratizing crypto trading shines through its accessible platform, emphasizing transparency, low costs, and seamless execution. With features catering to a wide audience like self-custody, open access, user-friendly interfaces, and flexible leverage, Hyperliquid appeals to traders of all strategies.

Furthermore, Hyperliquid introduces advanced trading features, including complex order types integrated with TradingView. This demonstrates Hyperliquid's dedication to merging centralized exchange efficiency with the benefits of a decentralized framework, ensuring a robust trading experience that meets diverse trader needs.

‍

Hyperliquid Supported Assets

Hyperliquid offers a wide range of over 122 cryptocurrencies for trading, featuring prominent ones such as BTC and ETH, alongside a vast selection of altcoins including AAVE, APE, ATOM, AVAX, BNB, DOT, LINK, MATIC, SOL, TIA, TRX, and XRP. This diverse portfolio ensures traders have access to a broad spectrum of cryptocurrencies.

Leverage options on Hyperliquid are tailored to each cryptocurrency, enhancing trading flexibility. For major cryptocurrencies like BTC and ETH, leverage can reach up to 50x. A considerable number of altcoins, such as AAVE, APE, ATOM, AVAX, etc., offer leverage of up to 20x. Other assets, including ACE, BADGER, BIGTIME, allow for leverage up to 10x. Some cryptocurrencies like BANANA, CANTO, CYBER, provides up to 3x leverage. This structure of leverage options caters to different risk appetites and trading strategies.

‍

Hyperliquid Fees

Hyperliquid introduced a tailored fee system: takers are charged 2.5 basis points (bps), while makers benefit from a rebate of 0.2 bps. This fee strategy is determined by a rolling 14-day trading volume, initiated from March 11, with volume tracking commencing on February 26.

The fee tiers apply uniformly across master and sub-accounts, ensuring sub-account volumes contribute towards the master account's total volume. However, volumes from vault transactions are assessed separately. Initially, Hyperliquid offered a fee and gas-free trading environment during the first three months of its mainnet closed alpha, showcasing its commitment to providing value to its community.

Hyperliquid stands out by redirecting all fees back to its users, particularly benefiting those in the Hyperliquidity Provider (HLP) program and the insurance fund.

‍

Hyperliquid Funding Rates

Hyperliquid employs funding rates for its crypto perpetual contracts to ensure the contract price closely tracks the underlying asset's spot price. Here's a simple overview:

• Funding is calculated and paid hourly, based on an 8-hour rate.
• The formula for funding rate is: Funding Rate (F) = Average Premium Index (P) + clamp (interest rate - Premium Index (P), -0.0005, 0.0005).
• Oracle prices derive from the weighted median of centralized exchange (CEX) spot prices.
• Funding rates are capped at a maximum of 4% per hour.
• Payments are calculated using the position size, oracle price, and funding rate.

For example, if the perpetual contract price is $10,100 and the spot price is $10,000, this results in a 1% premium index. For a long position of 10 contracts (1 BTC each), the premium would be 0.01 or 1%. The clamped interest rate difference becomes -0.05%, leading to a funding rate of 0.97%.

‍

What are Hyperliquid Vaults?

Hyperliquid Vaults introduce an innovative take on copy trading, integrated with the Hyperliquid L1 blockchain, enhancing the platform's capabilities. By investing in a vault, users mimic its trades and earn from the profits and losses. The Hyperliquidity Provider (HLP) scheme democratizes access to opportunities usually reserved for exchange insiders, allowing the community to back liquidation or market-making strategies and share in the outcomes. 

With a total value locked (TVL) of over $150 million and an annual percentage rate (APR) of 81%, setting up a vault is simple. Users just need to name their vault, describe it, and initiate it with a minimum of 100 USDC to begin trading.

‍

Hyperliquid Airdrop

Hyperliquid's points program, which began on November 1 at 00:00 UTC, is set to culminate in a token airdrop for its governance token, designed to acknowledge and reward users for contributing to the protocol's success. Key aspects of this program include:

• Weekly Distribution: For six months, Hyperliquid will allocate 1,000,000 points weekly to active users, with the first distribution having taken place on November 9.
• Affiliate Incentives: Affiliates gain additional benefits, earning one point for every four points their referred users earn, fostering community engagement and growth.
• Regular Updates and Schedule: The criteria for earning points are updated regularly. Points are calculated based on activity up to each Wednesday at 00:00 UTC, with distributions on Thursdays.
• Protocol's Discretion: Hyperliquid reserves the right to modify prior point distributions.
• Exclusive Snapshot for Alpha Users: A special snapshot for an additional points drop was taken on October 31 at 00:00 UTC, targeting closed alpha users.

This points system is a strategic move by Hyperliquid, not just to reward user engagement but also to pave the way for the distribution of its governance token through an airdrop, thereby enhancing user investment in the platform's governance and future direction.

‍

Bottom Line

Hyperliquid sets a new standard in decentralized trading, providing an on-chain DEX that rivals centralized counterparts with its advanced Hyperliquid L1 blockchain technology. Offering over 122 cryptocurrencies and variable leverage options, it caters to diverse trader needs. The platform stands out for its community-focused approach, rewarding participants through a fair fee system and innovative features like the Hyperliquid Vaults for copy trading.

With its clear commitment to user engagement and transparency, Hyperliquid not only enhances the trading experience with features like tailored fees and strategic funding rates but also fosters community involvement with initiatives like the governance token airdrop, ensuring a dynamic and inclusive trading environment.