Key Points:
HYPE has risen over 300% since April, thanks to the increased usage of the Hyperliquid exchange and heightened investor interest.
Hyperliquid now leads the decentralized perpetual contract market, handling over 70% of DEX perpetual contract trading volume.
97% of protocol fee revenue is used to repurchase HYPE tokens, aligning the token incentive mechanism with platform growth.
Hyperliquid is experiencing its moment in the spotlight. Since the local low in April, HYPE (HYPE) has surged over 300% in just two months, slightly retreating after reaching an all-time high on Tuesday. Meanwhile, the first-layer blockchain it powers has quietly become one of the major players in the DeFi space.
The data speaks for itself. According to DefiLlama, Hyperliquid currently ranks eighth in total value locked (TVL) across all blockchains, with a locked amount of $1.75 billion. Its flagship product—a high-performance DEX—now has a daily clearing trading volume exceeding $420 million, ranking sixth among all decentralized exchanges.
Additionally, Nasdaq-listed Lion Group recently announced it will hold $600 million in reserves, with HYPE as its primary treasury asset.
The momentum is continuously building. However, questions remain: Is the surge of this token supported by fundamentals, or is it merely another round of hype?
Founded in 2023 by Harvard alumni Jeff Yan and Iliensinc, Hyperliquid is one of the few major crypto projects that successfully launched without external funding support.
Hyperliquid has grand ambitions: to provide self-custody and transparency for decentralized exchanges while replicating the speed and convenience typically experienced only on centralized platforms.
In practice, this DEX indeed offers a smooth user experience, featuring one-click trading, direct deposits from over 30 chains, and access to spot, margin, and perpetual contract markets.
Notably, it cleverly avoids the complexities of asset cross-chain bridging by offering perpetual contracts linked to token prices rather than the tokens themselves—this design, while beneficial for efficiency, limits composability and cross-chain interoperability. It also heavily relies on the accuracy of price oracles and the funding rate mechanism.
This DEX is built on the Hyperliquid blockchain, a custom first-layer network that employs a Byzantine Fault Tolerance (BFT) consensus variant called HyperBFT. The protocol relies on fast, high-capacity communication between nodes, claiming to support transaction processing capabilities of up to 200,000 transactions per second.
However, this high throughput comes at the cost of decentralization: the network currently operates with only 21 delegated validator nodes, in stark contrast to Ethereum's 14,200 execution layer nodes.
The platform reached a critical turning point in November 2024, when daily trading volume surged tenfold, skyrocketing from $2 billion to over $20 billion. It now boasts a user base of over 500,000.
Creating an excellent product is one thing; realizing its commercial value in a way that genuinely benefits token holders is entirely another.
The HYPE token was issued in November 2024 through an airdrop, distributing 31% of the total supply of 1 billion tokens to users. So far, this has been the most valuable airdrop in history, reaching a value of $11 billion just one month after launch. Currently, 334 million HYPE tokens have a market value of $12.4 billion, with a fully diluted valuation of approximately $38 billion.
HYPE serves as both the gas token on the Hyperliquid chain and its governance asset. It can be staked on the platform, either directly or through validator nodes.
However, the question remains: Can holding HYPE provide long-term value?
Simon Dedic, CEO of Moonrock Capital, expressed his concerns on the X platform:
"I love Hyperliquid. I sincerely appreciate everything they are building and truly believe it is one of the best projects in the crypto space. But seriously—who would buy HYPE at nearly $50 billion [fully diluted valuation]? How can the risk/reward ratio remain reasonable in this case?"
In response, users including crypto analyst Ansem have clear views on this issue. They point out that concerns about valuation overlook Hyperliquid's actual performance and the vast potential of the space.
For instance, Hyperliquid currently accounts for 70% of all decentralized perpetual contract trading but only 10% of the total trading volume in the crypto sphere. There is significant room for growth to bridge this gap, especially if the regulatory environment in the U.S. improves.
Moreover, the supply of HYPE is carefully managed. Over the past six months, Hyperliquid's assistance fund has accumulated $910 million in HYPE repurchases, reinvesting about 97% of platform fee revenue back into HYPE.
Currently, only 34% of the total supply is in circulation, while a significant portion of the team's tokens (23.8% of the total supply) will remain locked until 2027-2028. Additionally, nearly 39% of the total supply is designated for "community rewards," which will be distributed gradually. Since the project has never accepted venture capital funding, there is no external pressure to sell tokens.
In this context, a fully diluted valuation of $38 billion to $45 billion, while high, may not be unreasonable for long-term holders who believe in the protocol's development trajectory.
Ansem analyzes that current buyers may include late-stage venture capitalists excluded from early rounds, traditional financial analysts applying price-to-earnings logic to cryptocurrencies, and whale investors shifting funds from Ethereum (ETH) or Solana (SOL) to what they perceive as the next dominant trading layer.
Hyperliquid seems well-prepared to attract funding. However, this is not always an advantage. Time and again, investors and users choose centralized platforms for convenience, only to be reminded later that decentralization is not just an ideological preference—it is a design choice made to enhance system resilience. Centralized risks are rarely acknowledged—until they suddenly become critically important.
Related: Anchorage adds DeFi functionality for institutions through integration with Uniswap wallet
This article does not contain any investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original article: “Hyperliquid DEX Token Rises 300% in 2 Months: Is the Hype Coin (HYPE) Justified?”
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