The opportunity is significant, but it may be too early.
Author: Jack Kubinec
Translated by: Deep Tide TechFlow
Next, we will delve into the comparison between Hyperliquid and Solana: Will HYPE become the next SOL?
Will HYPE be the next SOL?
Among the cryptocurrencies issued after the FTX collapse, there are very few tokens in the top 15 by market capitalization. Two exceptions are: SUI, which started trading in mid-2023; and HYPE, which has seen its market cap soar to over $11 billion since its airdrop in November 2024.
As the native token of Hyperliquid Layer-1, HYPE has more than tripled in price since its local low on April 6, 2024, far exceeding Solana's approximately 70% increase during the same period. For crypto investors looking for the next Layer-1 token that could deliver returns similar to Solana, HYPE has undoubtedly generated significant attention. Even Galaxy's Mike Novogratz has joined this trend.
Hyperliquid's core Layer-1 application chain, HyperCore, is designed for its order book exchange, which generates revenue through trading fees that are used for token buybacks. This product has been extremely well received: according to data from Artemis, in April 2024, Hyperliquid accounted for 77% of the on-chain perpetual contract trading volume.
Additionally, Hyperliquid has launched an Ethereum Virtual Machine (EVM) network called HyperEVM, but its adoption rate is currently far behind that of HyperCore.
Regarding the valuation of HYPE, there are some market discrepancies: should it be viewed as a decentralized exchange (DEX) token in a saturated perpetual contract market? Or should it be seen as a Layer-1 token that can compete with Ethereum and Solana?
Currently, HYPE's pricing is positioned between the two. Ryan Watkins from Syncracy Capital (who holds both HYPE and SOL in his portfolio) released a chart in early March showing that Hyperliquid's trading fee multiples are lower than those of other Layer-1s, including Solana.
Translation: Deep Tide TechFlow
Blockworks Research analyst Boccaccio pointed out that Hyperliquid's fully diluted valuation (FDV) to fee ratio is higher compared to competitors Drift and dYdX, indicating that its appeal to investors is not limited to being a simple perpetual contract DEX, but is assigned a higher value.
Bitwise Research analyst Danny Nelson stated that Hyperliquid aims to create a vibrant blockchain economy like Solana, but it has "not fully achieved this goal" yet.
"Nevertheless, the flagship perpetual contract exchange of the ecosystem has become an industry giant. The market pricing of HYPE reflects this, and I believe this pricing approach also attempts to anticipate that Hyperliquid will spawn more successful projects in the future," Nelson added.
Additionally, there are some unique factors influencing Hyperliquid's value positioning: Hyperliquid's validator cluster is not highly decentralized compared to other Layer-1 projects. Hyperliquid does not require users to undergo "Know Your Customer" (KYC) verification, while most centralized exchanges (like Binance) do require this process. This feature may be attractive to certain traders and is factored into market valuations.
For those token investors seeking excitement in the market, HYPE appears to be a rare opportunity in recent years. However, it may still be too early to call it the next SOL.
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