Author: Frank, PANews
Recently, the MEME coin on the Layer1 public chain Hyperliquid has attracted the attention of players. The market value of the top project PURR exceeds 110 million US dollars, which not only surpasses most MEME coins on public chains, but also ranks in the top ten in the MEME rankings on the Solana chain. In addition to PURR, there are two other MEME coins on the Hyperliquid chain with market values exceeding 20 million US dollars.
The emergence of these potential projects inevitably leads people to wonder whether this new generation L1 is becoming a new MEME blue ocean market. However, from the perspective of Hyperliquid, MEME seems far from their true target.
The L1 that changed course halfway and claimed to build the fastest public chain in the world
It is not easy to understand the positioning of Hyperliquid at first. The homepage of its official website introduces Hyperliquid as a decentralized perpetual exchange, while its documentation states that Hyperliquid is a high-performance L1 optimized from scratch. However, this is not due to negligence, but rather reflects the dual roles of Hyperliquid.
The founder of Hyperliquid, Jeff Yan, previously founded Chameleon Trading, a top ten high-frequency cryptocurrency trading company. Most of the team members of Hyperliquid also come from Chameleon Trading. For a team with ample experience in high-frequency contract trading, the initial goal of Hyperliquid was not to build a public chain, but to "establish a decentralized Binance".
Therefore, the initial product of Hyperliquid was a decentralized perpetual exchange called Hyperliquid. With the increase in business volume, Hyperliquid believes that "the only way to establish a scalable perps DEX is to build an L1 from scratch".
In response to the demand for high-frequency trading on the chain, Hyperliquid shifted its focus to L1 construction and positioned the DEX as the flagship product of this L1. Currently, the mainnet of Hyperliquid L1 can support 100,000 transactions per second. According to official information, this figure is expected to increase to millions per second in the future. Even at the current rate, 100,000 TPS is still the fastest among all public chains.
"Most L1s build infrastructure and hope that others will build killer applications. Hyperliquid takes the opposite approach: first polish local applications, and then develop into general infrastructure," explained Jeff Yan on social media regarding Hyperliquid's route of thinking.
Generated $35 million in revenue, with a token market value exceeding $200 million
Hyperliquid has not accepted any external funding, and the team stated: "This allows the team to focus on building their believed product without external pressure."
However, not raising funds does not mean that Hyperliquid has no airdrops to offer. Since November 2023, Hyperliquid's points program has attracted a large number of users to participate. The platform distributes a fixed amount of points each week, and the points are distributed in proportion to the user's trading volume. Users who receive points can receive rewards from the platform's revenue.
As of July 25, 2024, data shows that Hyperliquid's Hyperliquidity Providers have generated a total of $34.94 million in revenue, mainly from providing liquidity, executing settlements, and collecting platform fees. Users can deposit funds into the liquidity pool to earn profits.
This model is similar to the trading mining that was popular on various exchanges a few years ago. However, from CEX to DEX, the concept of trading mining still remains popular in the community.
In addition to official liquidity rewards, Hyperliquid also allows the creation of personal vaults, where any user can create a personal vault (similar to an on-chain private equity fund), and other users can choose whether to deposit funds based on the creator's past trading performance. The creator then takes 10% of the profits. Of course, this type of investment is also full of risks, as 4 out of the top 10 vaults in terms of TVL are showing losses. However, this model of entrusting money to smarter individuals still attracts a considerable amount of funds, with a fund pool offering an annualized return of 727% attracting over 1 million in funds.
As of now, Hyperliquid has not issued an official governance token. The points have become a potential asset for the platform's revenue, and currently, the price of Hyperliquid points on whales.market is maintained at around $4.4. According to community member statistics, a total of 51.06 million points will be issued. Based on this quantity, the market value of the points has reached $224 million.
The MEME effect has yet to manifest
PURR is the first native token on Hyperliquid to implement the HIP-1 standard, a MEME coin featuring a cat image. The token was not initially sold, but 50% of the tokens were airdropped to users based on their points holdings, and the remaining 50% were added to the PURR/USDC liquidity pool (subsequently, 40% of the tokens were burned based on community suggestions). As of July 25, the market value of PURR is approximately $110 million, making it the highest valued token listed on Hyperliquid, with a price increase of about 10 times since its launch. The second highest valued token is BIGBEN, with a market value of approximately $28.5 million, a MEME coin themed after Big Ben, which has roughly doubled in value since its launch.
HFUN is the token with the highest increase in value on Hyperliquid, with a market value of approximately $25 million and a maximum increase of over a hundred times. In addition, the market values of other native tokens on the Hyperliquid chain do not exceed $10 million.
As of July 25, 2024, there are not many native tokens on the Hyperliquid chain, with only 44 trading pairs, most of which are MEME tokens. The 24-hour trading volume of MEME coins on Hyperliquid is still relatively low, at around $10 million.
By taking actions to reinvest all revenue back into the community, Hyperliquid has attracted an increasing number of users to participate in platform trading. According to data from DeFiLlama, as of July 25, Hyperliquid's TVL is $430 million, ranking fourth in the derivatives product category, second only to GMX, Jupiter, and DYDX. According to official data, Hyperliquid has 183,000 users and a 24-hour trading volume of $1.5 billion.
However, this does not seem to be Hyperliquid's goal. According to a report from Protecc Labs on Hyperliquid, Hyperliquid believes that its true competitors are not other derivatives exchanges, but Binance and the Solana chain. The founder of Hyperliquid believes that "Solana and Binance have become giants in their respective fields and have created highly attractive environments for their target audiences. Hyperliquid solves a huge problem on Solana, which is the on-chain order book and fragmented liquidity, requiring SOL as fuel for trading. At the same time, it also solves a huge problem on Binance, which is decentralization (access to the best products without strict KYC/AML)."
In terms of this goal, Hyperliquid has a grand narrative, but whether this goal can be achieved still requires Hyperliquid to present more killer moves.
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