Author: nairolf

Translation: Deep Tide TechFlow

"Friend, what is Hyperliquid's bidding mechanism?"

Here’s a (super) simple way to explain the HIP-1 proposal put forward by @HyperliquidX.

"What is this?"

HIP-1 is a standard for a limited supply fungible token.

It defines the rules for how tokens are listed on the Hyperliquid platform. Tokens are sold through a Dutch auction, with each auction lasting 31 hours, and the starting price is double the closing price of the previous auction.

"Don't understand?"

Hyperliquid is an L1 blockchain with a built-in exchange.

It supports various perpetual contract trades, allowing users to go long or short on almost any token, and leverage can be used.

Additionally, it has a spot trading area, similar to Binance or Coinbase, but it is completely decentralized, which hopefully helps you understand.

"Got it, but how is it implemented?"

Because Hyperliquid is decentralized, a fair mechanism is needed to determine which tokens can be listed, rather than leaving it to a single team or individual to decide arbitrarily. This is different from centralized exchanges, which typically decide listings by charging fees or selectively choosing tokens.

"How does it work specifically?"

Hyperliquid implements token listings through an auction mechanism.

In simple terms, every 31 hours, a new "listing right" is publicly auctioned. The starting price of the auction is double the closing price of the last "listing right," and the price gradually decreases over time until someone makes a purchase.

"Give me an example"

Suppose you want your "XYZ" token to be listed on Hyperliquid.

Contacting the team directly to request a listing won't work. Instead, you need to purchase a "listing right," which requires participating in the auction.

"So how much does it cost?"

The first step is to check the closing price of the last "listing right," say it was $69,420.

The starting price for the next auction will be double that, which is $138,840.

This price will gradually decrease over time until someone decides to purchase it. After that, this auction process will repeat every 31 hours.

"So I can list my token?"

That's right. Anyone can participate in the auction, and if they find the price suitable, they can purchase a "listing right" to have their token listed on Hyperliquid.

The 31-hour interval ensures that not too many tokens are listed, maintaining the platform's scarcity and the uniqueness of the tokens.

Summary

Hyperliquid's auction mechanism determines the price at which new tokens are listed on the spot exchange.

Each auction is limited by time and price—an auction occurs every 31 hours, starting at double the closing price of the last auction, and then the price gradually decreases until someone makes a purchase.

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