Hyperliquid: Inside the $1.5B Token Airdrop
On November 29, Hyperliquid conducted one of the largest airdrops in crypto history, distributing tokens valued at $1.5 billion. Following this event, concerns emerged in the media regarding potential shortcomings in the project’s decentralization. In the sections that follow, we will present clear, unbiased metrics and outline the operational model behind Hyperliquid.
Decentralized finance (DeFi) seeks to offer permissionless, transparent, and composable financial services on blockchain networks. While early automated market maker (AMM) exchanges and lending protocols validated its core principles, critical issues of performance and trust remain. Centralized exchanges still dominate due to superior liquidity, speed, and user experience, and the collapse of platforms like FTX in 2022 underscored the systemic risks of custodial models. These shortcomings have renewed interest in fully on-chain solutions that preserve performance while removing reliance on intermediaries.
Historically, achieving a high-performance, trustless derivatives exchange on a standard Layer-1 blockchain proved difficult, as platforms like Ethereum cannot currently support the low latency and throughput required for real-time order books. Many projects depend on Layer-2 rollups, off-chain order matching, or centralized relays, each introducing trade-offs in trust or autonomy. Liquidity—a cornerstone of efficient markets—has traditionally required trusted intermediaries, creating single points of failure.
Core Principles and Philosophy
In contrast to VC-driven projects with locked-up allocations and insider-friendly token economics, Hyperliquid reserved 70% of $HYPE’s total supply for the community. No private investment rounds diluted user interests, ensuring distribution remains broad and egalitarian. By eschewing external capital, Hyperliquid aligns incentives with its user base and encourages organic network effects.
A cornerstone of Hyperliquid’s philosophy is its large-scale airdrop strategy. To ensure fairness, stringent anti-sybil measures flagged around 27,000 fraudulent wallets, enhancing rewards for legitimate users. As of now, approximately 270.94 million $HYPE (87% of the total; 94,000+ adresses) has been claimed, according to ASXN's dashboard. At current market prices, the distributed tokens represent a value exceeding $7.5 billion.
Instead of relying on transient incentive programs, Hyperliquid delivers fundamental infrastructure benefits—low latency, deep liquidity, and robust risk management—ensuring sustainable growth driven by user satisfaction and strong operational fundamentals.
Core Team
The Hyperliquid Labs team, a core contributor to the growth of Hyperliquid, is led by co-founders Jeff and iliensinc, both Harvard classmates. The team includes members from prestigious institutions such as Caltech and MIT, with professional experience spanning leading firms like Airtable, Citadel, Hudson River Trading, and Nuro.
Initially focused on proprietary crypto market-making in 2020, the team shifted to DeFi in 2022, driven by frustration with the inefficiencies of existing platforms, including poor market design, subpar technology, and clunky user interfaces. Leveraging their expertise, the team aims to bridge the gap between decentralized and centralized trading experiences by building a seamless, efficient, and user-friendly product.
Funding Insights
Tokenomics (HYPE)
Current Market Metrics
Price: $25.11 | Market Capitalization: $8.51 billion | Fully Diluted Value (FDV): $25.5 billion
Supply Breakdown
Circulating Supply: 333,928,180 HYPE (33.39% of max supply - 1B)
Unlocked Tokens: 37.31% (373.12 million HYPE)
Locked Tokens: 238 million HYPE (23.80% of max supply)
Unlock Progress: 37%
Token Allocation
Total Locked: 23.80% (238 million HYPE) | TBD Locked: 38.89% (388.88 million HYPE) | Unlocked: 37.31% (373.12 million HYPE)
Hyperliquid reinvests trading fees into its token economy rather than treating them as profit. Spot trading fees are used for $HYPE buybacks and burns, reducing supply and stabilizing value. As of December 19, 2024, 89,000 $HYPE had been burned.
Buybacks and burns are triggered at thresholds to balance the token economy. Over time, trading fees may flow directly to validators and $HYPE stakers, reinforcing decentralized governance and incentives.
The HLP Vault rewards liquidity providers who deposit USDC to support trading across listed assets. Providers earn a share of trading fees and market-making profits. In November 2024, the HLP Vault delivered a monthly return of ~1.78%, equivalent to an annualized return of ~24%. These yields attract capital, deepen liquidity, and enhance market efficiency.
Hyperliquid L1 Architecture
Hyperliquid L1 is purpose-built to enable a decentralized perpetual futures exchange with performance comparable to centralized exchanges (CEXs) while maintaining DeFi's trustlessness and composability. Key requirements include:
High Throughput: Current DeFi systems achieve only a few thousand TPS. Hyperliquid aims to exceed 100,000 orders per second.
Low Latency: Near-instant feedback and confirmations are essential for high-frequency trading strategies and retail user satisfaction.
Full Decentralization: All states—margin accounts, order placement, and matching logic—are maintained on-chain to ensure transparency and eliminate reliance on off-chain systems.
HyperBFT Consensus
Hyperliquid L1 leverages HyperBFT, a custom Byzantine Fault Tolerant (BFT) consensus algorithm optimized for low end-to-end latency, measured from client request to transaction finalization. Mainnet testing shows a median latency of 0.2 seconds and a 99th percentile latency of 0.9 seconds. HyperBFT builds on established BFT designs, incorporating enhancements for efficient networking and rapid block finalization.
Execution and Throughput
Although the consensus layer can handle millions of orders per second, current execution infrastructure supports up to 100,000 orders/sec. The team prioritizes scaling execution capabilities, recognizing that high-performance trading demands continuous improvement in smart contract logic, order-matching engines, and state management systems.
Liquidity as a Service: The “AWS of Liquidity” Concept
AWS transformed computing by abstracting away bare-metal servers, allowing developers to focus on business logic rather than infrastructure. Hyperliquid applies a similar logic to liquidity. Developers who build on Hyperliquid need not reconstruct order book logic, liquidity incentives, or complex backend systems. Instead, they access a ready-made liquidity pool and order matching infrastructure at the protocol level.
Builder Codes are a key innovation. They enable third-party developers, regional exchanges, and specialized front-ends to integrate directly with Hyperliquid’s order book. Each builder can define its own fee structure and user interface without custodial control over user funds. This model dramatically lowers the barrier to entry, allowing a thousand exchanges to bloom—each tailored to specific user demographics, geographies, or trading strategies, but all leveraging Hyperliquid’s deep liquidity.
EVM compatibility ensures that lending protocols, stablecoins, yield aggregators, and insurance products can interoperate with Hyperliquid’s liquidity engine. This composability creates a “financial Lego” environment, where advanced strategies like automated hedging, cross-margining, and yield optimization emerge naturally. Over time, this could spawn a new class of DeFi primitives that rely on liquid, real-time markets at their core.
Trading Mechanics and User Experience
Hyperliquid’s perpetual futures mirror CEX standards, supporting USDC-margined contracts and leverage up to 50x. Funding rates incorporate both a fixed interest component and a market-driven premium. This ensures perpetual prices converge to underlying spot values, stabilizing the market and providing a robust environment for hedgers, speculators, and liquidity providers.
By eliminating gas fees and enabling near-instant finality, Hyperliquid addresses core user pain points in on-chain trading. The user interface is streamlined, providing a one-click experience comparable to Web2 platforms. Mobile and desktop optimization ensure broad accessibility, lowering barriers to entry for both crypto-savvy traders and newcomers.
Key Metrics
Conclusion
In contrast to token-driven ventures reliant on speculative funding, Hyperliquid adopts a user-centric, fee-averse approach intended to cultivate a durable and engaged community. While on-chain derivatives platforms such as dYdX or GMX have gained traction, none replicate Hyperliquid’s full integration of order books, a dedicated L1 blockchain, and user-aligned economics. Although centralized exchanges like Binance or OKX currently provide deeper liquidity, Hyperliquid’s transparent, trust-minimized structure positions it as a credible alternative as confidence in custodial services wanes.
Regulatory standards for decentralized derivatives remain in flux, yet Hyperliquid’s fully auditable and self-custodied model may align more closely with emerging compliance expectations. Its dual-layer architecture—combining a specialized Hyperliquid L1 with the flexible HyperEVM—aims for institutional-grade transaction speeds and CEX-level liquidity, while HyperBFT consensus supports throughput theoretically reaching millions of orders per second.
Links:
https://hyperliquid.asxn.xyz/staking (Validator Stats)
Sources:
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