Authors: Michael Zhao, Zach Pandl, Grayscale

Compiled by: Deep Tide TechFlow

Summary: Grayscale Research has released an in-depth research report on Hyperliquid. This DeFi project, which has never received any venture capital funding, generated approximately $800 million in revenue in 2025, ranking third or fourth in the industry in terms of open interest in perpetual contracts. Grayscale believes that as the US regulatory framework gradually clarifies, Hyperliquid has the potential to evolve from an on-chain derivatives exchange into a full-service financial services platform. For HYPE holders, the most crucial signal from this report is that, based on the valuation multiples of comparable traditional exchanges, HYPE's current P/E ratio of approximately 14 still has room for growth.

Imagine a startup that breaks into an extremely competitive industry in less than three years. Last year, it generated approximately $800 million in revenue and faces a huge potential market. The team is lean, and the operational leverage is extremely high. And all of this is achieved while users in major markets like the US still cannot use it.

This is Hyperliquid.

Caption: Exhibit 1, Hyperliquid is a game-changer in the contemporary digital asset industry.

At its core, Hyperliquid is a decentralized exchange specializing in perpetual futures, a type of derivative with no expiration date. Crypto perpetual futures are already a huge business: the industry's daily trading volume is projected to reach approximately $200 billion by 2025. This market has long been dominated by centralized exchanges (CEXs) such as Binance, OKX, and Bybit. Hyperliquid is the first decentralized project to truly gain market share in terms of trading volume and open interest.

Simply gaining market share in the perpetual contracts market is enough to drive significant growth for the platform. But Hyperliquid's ambitions extend far beyond that. While perpetual contracts remain its primary revenue source, Hyperliquid is now a financial services platform covering multiple vertical sectors.

Caption: Exhibit 2, Hyperliquid's diversified financial services portfolio.

Like other blockchain protocols, Hyperliquid is not a company and does not issue shares. Its token drives the entire network, deriving value from transaction activity. HYPE has a circulating market capitalization of approximately $13 billion, ranking 8th among crypto assets by market capitalization. Compared to comparable publicly traded companies, HYPE's valuation multiple is not high. Considering the platform's user growth, large potential market, and upcoming regulatory deregulation, we believe Hyperliquid still has significant upside potential.

Caption: Exhibit 3, HYPE's market capitalization trend since its launch.

Perpetual Contract Basis

While Hyperliquid has a grander vision, it's decentralized perpetual contract trading that has brought it to the forefront. This type of product originated in the crypto industry, and Grayscale believes it will eventually deeply penetrate traditional finance.

Traditional futures contracts have expiration dates. For example, a crude oil futures contract stipulates the delivery of a certain quantity of crude oil on a specific date. Participants whose positions expire must actually take delivery of the underlying asset. If they only want to engage in pure financial exposure, users need to "roll over" their positions to a later contract before expiration.

Perpetual contracts have no expiration date and never involve delivery. They are designed to provide hedgers and speculators with pure financial exposure to the underlying asset and are typically traded 24/7.

Traditional futures contracts are anchored to the price of the underlying asset because someone must take delivery upon expiration. Perpetual contracts, however, never expire. How do they maintain price tracking? The answer is the funding rate mechanism: a small fee is periodically paid between long and short positions. When the perpetual contract price is higher than the spot price, the long position pays the short position; when it's lower, the opposite happens. The greater the deviation, the higher the fee.

Caption: Exhibit 4, the funding rate mechanism anchors the perpetual contract price to the underlying asset.

Perpetual contracts and the crypto market are a natural fit. Crypto assets trade 24/7, demand is high from both retail and professional speculators, and new assets emerge much faster than those listed on traditional futures exchanges. Perpetual contracts provide traders with a simple way to express directional views, hedge spot exposure, and use leverage around the clock. It is now one of the core markets for crypto price discovery.

Caption: Exhibit 5, Global Bitcoin Perpetual Contract and Spot Trading Volume

Retail investors have many avenues for accessing leverage: traditional brokerage margin accounts, futures and options with expiration dates, and leveraged ETFs. Experience in the crypto market suggests that when all options are available, retail investors tend to prioritize perpetual contracts, largely due to their simplicity. A similar user migration is expected once perpetual contracts become more widely available to participants in traditional markets.

Hyperliquid's breakthrough

Hyperliquid achieves a core breakthrough: centralized exchange-level performance plus blockchain transparency and self-custody .

From a trader's perspective, Hyperliquid is almost indistinguishable from centralized exchanges: deep order books, fast execution, and a familiar position management interface. However, every Hyperliquid transaction is recorded on-chain, including settlement, and users always maintain self-custody.

Caption: Exhibit 6, Hyperliquid's trading experience is close to that of centralized exchanges. Source: Screenshot from app.hyperliquid.xyz, May 12, 2026

Leveraged trading is the most fiercely competitive segment of the crypto market, with extremely demanding users. Hyperliquid's success is due to its product strength.

The numbers speak for themselves: In 2025, perpetual contract trading volume reached $2.9 trillion, with current open interest at approximately $7 billion. Ranked by OI, it is either the third or fourth largest perpetual contract exchange in the industry. Trading volume, open interest, fee revenue, and market attention are all growing in tandem, and the platform has begun expanding from the pure crypto market to a wider range of tradable assets.

Caption: Exhibit 7, Hyperliquid has become the third or fourth largest cryptocurrency perpetual contract exchange.

In terms of fees, Hyperliquid has a cost advantage over centralized exchanges. Based on 2025 BTC and ETH trading data, the weighted average fee rate of CEXs is 15 basis points (bp) for spot trading and 4 bp for futures trading; Hyperliquid's rates are 5 bp and 2 bp, respectively.

Caption: Exhibit 8, volume-weighted fee rate comparison. Note: Estimated maker/taker fees based on publicly available rates for basic user accounts, excluding fee tiers, discounts, and order book depth.

More noteworthy is that Hyperliquid has expanded its product line beyond crypto perpetual contracts through an open architecture.

New features are typically introduced through Hyperliquid Improvement Proposals (HIPs), and the product is deployed by third-party developers, rather than by the Hyperliquid team itself.

HIP-3 allows developers to deploy new perpetual contract markets, including non-crypto assets such as stocks, commodities, and indices. These markets have become very popular with users and have begun to serve as after-hours price discovery venues for traditionally traded assets. Bloomberg directly used this framework to describe Hyperliquid's commodity perpetual contracts, stating that the movements of its crude oil, gold, and silver perpetual contracts "may foreshadow the direction these markets will take once mainstream trading resumes." In another report, Bloomberg described Hyperliquid as "a 24/7 leveraged commodity trading venue."

Trading volume data confirms this positioning. During the silver price surge in February, the daily trading volume of the HIP-3 silver perpetual contract reportedly exceeded $4 billion. At one point on February 5th, the notional trading volume of the HIP-3 silver perpetual contract was approximately 1% of the COMEX silver trading volume. During the Middle East oil price volatility, the HIP-3 oil perpetual contract saw a 24-hour trading volume exceeding $4 billion on April 9th, briefly surpassing the trading volume of Bitcoin perpetual contracts. An officially licensed S&P 500 contract is also now traded on Hyperliquid via HIP-3, including over the weekend. Since its launch, HIP-3 has accumulated a trading volume of over $230 billion, with over 140 active trading pairs currently.

Caption: Exhibit 9, HIP-3 expands Hyperliquid from crypto perpetual contracts to a wider range of asset classes.

HIP-4 extends further to outcome markets, similar to binary options on prediction market contracts. These contracts are also deployed by third-party developers, but trading activity still generates fee revenue for Hyperliquid.

Hyperliquid's technical architecture

The underlying architecture revolves around two core components:

HyperCore is the trading system, which includes the order book, clearing, perpetual contracts, spot trading, margin, and clearing environment. This is the main part that traders interact with directly.

HyperEVM is a developer-level environment that provides an EVM-compatible development interface and connects to the Hyperliquid system. The strategic intent is to allow applications to be built around the liquidity, users, and asset base already created by the exchange, rather than starting from a cold network with no native financial activity.

HyperBFT is a delegated Proof of Stake consensus layer responsible for network security.

The key lies in the design choices: Hyperliquid is not an application built on a general public blockchain, but a dedicated chain and execution stack optimized for exchange performance, with the goal of making the on-chain trading experience competitive with centralized trading infrastructure.

Caption: Exhibit 10, Hyperliquid's architecture as a marketplace platform.

Five elements of success

Hyperliquid went public in August 2023, earlier than the launch of US Bitcoin ETPs, when DeFi as a whole was in a slump. Its success was not a product of a speculative bubble, but rather because it solved a specific problem better than most crypto infrastructure projects: making on-chain transactions truly usable for high-frequency traders.

Five key factors:

Product Focus. Hyperliquid is built around the perpetual contract trading scenario, rather than treating trading as just one of many applications. This allows the product to prioritize what active traders care about most: fast order placement, reliable execution, clear position display, and a familiar exchange interface.

Market selection. Hyperliquid gains attention by listing markets that traders "most want to trade right now," especially long-tail, high-demand assets outside of BTC and ETH.

Platform flexibility. HIP-3 allows developers to directly deploy new perpetual contract marketplaces, transforming the listing model from a centralized gatekeeper to an open marketplace creation system.

Distribution network. Hyperliquid's builder code and front-end model gave third parties a reason to channel users into a single liquidity pool, rather than dispersing them across isolated locations. The economic benefits have been substantial: Phantom, through its builder code integration with Hyperliquid perpetual contracts, has earned approximately $19.7 million from routed transaction fees.

Community. Hyperliquid rewards token distributions to platform users, not venture capitalists or pre-selected insiders. This creates a different early holder structure—traders, market participants, and developers who already have a reason to follow the project. This is important in a trust-scarce sector.

These advantages, taken individually, are not decisive, but together they explain why Hyperliquid has become one of the few crypto applications whose success can be measured by actual usage rather than vision.

Hyperliquid strengthens its competitive advantage through the interplay of liquidity, distribution, and developer incentives. Higher trading volume translates to better liquidity and trade quality, attracting more users and third-party frontends. Builder code and HIP-3 provide an economic incentive for external developers to route their activity back to the same liquidity pool. This creates a potential network effect that is difficult for newcomers to replicate: liquidity attracts distribution, distribution generates more trading volume, and trading volume further strengthens the protocol's economic foundation.

HYPE token

The HYPE token drives the entire Hyperliquid ecosystem.

The project did not receive traditional venture capital; instead, it airdropped approximately 30% of the token supply to early users. This determined who cared about HYPE: the initial holder group was highly skewed towards users who already understood the product, traders, and community members.

Caption: Exhibit 11, HYPE's price trend since its launch.

HYPE's value stems from transaction fees and functional uses. Hyperliquid Labs confirms that 99% of transaction fees go into an assistance fund, which converts these fees into HYPE and burns its holdings. Token burning is similar to buybacks in the traditional stock market. Because the amount burned exceeds the new issuance, HYPE's circulating supply has been declining.

Caption: Exhibit 12, Changes in the destruction, emissions, and supply of HYPE.

The uses of HYPE within the ecosystem include:

Staking and Validator Participation: HYPE ensures cybersecurity through validator staking.

Gas Fee: This is HyperEVM's native gas token. HyperEVM's base fee and priority fee will be burned.

Fee discounts: Staking HYPE can reduce transaction fees.

Market creation collateral: In HIP-3, deployers must maintain 500,000 staked HYPE to operate the perpetual contract market deployed by builder. This stake serves as both capital to bind interests and a guarantee of market quality. The HIP-4 results market is now live, and if permissionless deployments adopt a similar model, it may further enhance the role of HYPE.

HYPE is tied to a venue with measurable trading activity, fees, and developer demand. The more trading volume the venue handles, the more important fee schedules, staking tiers, builder economics, and aid fund mechanisms become. The more HyperEVM, HIP-3, and HIP-4 expand the platform's boundaries, the greater the utility and potential value accumulation of HYPE.

Valuation space

Hyperliquid is a unique platform offering a range of financial services, which makes effectively assessing its upside potential challenging. However, based on reasonable comparable benchmarks, Grayscale believes both the platform and its token have substantial growth potential.

The chart below compares Hyperliquid's revenue to a range of trading platforms, including centralized crypto exchanges, traditional spot and derivatives exchanges, and prediction markets. Hyperliquid's estimated $800 million in revenue by 2025 is substantial, but represents only about 2% of total crypto perpetual contract trading revenue. If Hyperliquid's non-crypto products continue to see adoption, it has the potential to tap into the broader derivatives exchange industry's annual revenue pool of approximately $35-40 billion.

Caption: Exhibit 13, Hyperliquid revenue compared to the exchange industry.

HYPE is not a stock, but it can be roughly compared to traditional stocks in related industries. Based on earnings for the four quarters ending in Q1 2026, HYPE's current valuation multiple is approximately 14x. Valuation multiples for exchange-traded companies vary considerably, but high-growth companies like Interactive Brokers and Robinhood have multiples in the 35-50 range.

Caption: Exhibit 14, Hyperliquid's valuation multiple is lower than that of comparable companies.

US regulators: Perpetual contracts are coming soon.

Hyperliquid sits at the intersection of two regulatory vacuums in the US: perpetual contracts and decentralized exchanges. Both areas are now moving towards clearer frameworks.

Perpetual contracts have historically been practically unavailable in the United States. They weren't explicitly prohibited, but they couldn't be cleanly incorporated into the framework of the Commodity Exchange Act (CEA). The CEA is the federal regulation governing commodities and derivatives, with specific requirements for clearing, margining, and the enforcement of registered trading venues. This ambiguity has led to enforcement actions against centralized and DeFi platforms, and explains why Hyperliquid operates overseas and geo-blocks its U.S. users.

However, the situation is rapidly changing. Recent statements from the CFTC, coupled with actions by companies like Coinbase, Kraken, Robinhood, and Kalshi, indicate that regulators are actively pushing for the adoption of perpetual contract-like products within a compliant framework. The legal key lies in the classification issue: are perpetual contracts considered futures or swaps under the CEA? The method regulators choose to clarify this classification (rule-making, guidance, or no enforcement remedies) will determine the timing and duration of market access.

In the short term, regulatory developments may primarily benefit centralized registered exchanges. However, in the medium term, CFTC rulemaking, guidance, or non-enforcement remedies could pave the way for Hyperliquid to offer compliant perpetual contract products in the United States, reducing its reliance on purely overseas access.

Meanwhile, Hyperliquid's exchange-like functionality has directly embroiled it in the debate over how to regulate DeFi protocols. Currently, the United States lacks a specific rulebook designed for DEXs. Regulators apply existing SEC and CFTC frameworks based on functionality, with the core principle being "decentralization does not equal exemption."

For DEXs focused on derivatives, this means stricter scrutiny and clear barriers to direct institutional participation—currently, institutional involvement is primarily through intermediaries or offshore channels. Progressing legislation such as the CLARITY Act points to a more structured, role-based framework for the digital asset market, including clearer distinctions between protocol-level activities, front-end operators, intermediaries, and registered trading venues.

This distinction is crucial for Hyperliquid: as a non-custodial infrastructure, its core protocol may ultimately receive different regulatory treatment than the interface or entity that facilitates user access. These proposals haven't yet created a fully viable regime for on-chain perpetual contracts, but they represent a path towards that goal—especially if coupled with targeted safe harbor provisions, a clearer definition of brokers, and rules tailored to on-chain market structures such as margin, funding rates, and 24/7 trading. The regulatory direction is to enable innovation within a safety fence, and Hyperliquid's positioning—open, global, and non-custodial—aligns with the policy discussions surrounding preserving permissionless access while introducing appropriate market protections.

risk

HYPE investors should be aware of both general risks and some risks specific to the Hyperliquid platform:

HYPE's annualized price volatility is approximately 80%, about 40 percentage points higher than Bitcoin's. Hyperliquid's validator pool is more centralized than other blockchain networks and runs on closed-source software. Hyperliquid's growth potential depends in part on changes in US financial services regulations; if regulations don't loosen, the platform may be limited to other jurisdictions, limiting its growth.

in conclusion

Hyperliquid has no direct counterpart in either crypto or traditional finance. It offers a compelling vision of the future of blockchain finance: an open architecture platform built on permissionless innovation, adhering to the principles of transparency and self-custody in DeFi. Furthermore, it's built around an optimized core application that has already proven successful with real-world user data. If it can maintain its execution, retain and grow its community, and benefit from regulatory changes, Grayscale believes Hyperliquid has the potential to become a financial services giant.