Written by: Curry North, Deep Tide TechFlow

For the past month, the crypto market's attention has been focused on Bitcoin's back-and-forth trading, or simply on the gold and silver bull market. But amidst this dull sideways movement, one platform is quietly launching an offensive: Hyperliquid.

Three numbers explain what happened.

Let's start with the data. On Monday, January 27th, Hyperliquid's HIP-3 open interest reached a record high of $793 million. Just a month ago, that figure was only $260 million.

What is HIP-3?

In short, it's the "permissionless perpetual contract deployment" feature launched by Hyperliquid last October. Anyone can issue perpetual contracts on the platform by staking 500,000 HYPE tokens. It sounds technical, but the results are solid: in less than four months since its launch, this feature has generated a cumulative trading volume of $25 billion.

The second piece of data is even more interesting.

Hyperliquid CEO Jeff Yan recently posted a comparison chart: the bid-ask spread for BTC perpetual contracts on the platform is only $1, while Binance's spread is $5.5. In terms of order book depth, Hyperliquid has 140 BTC available at certain price levels, while Binance only has 80.

What does this mean? It means that in terms of liquidity, a decentralized exchange is beginning to be able to compete with the world's largest centralized exchanges.

The third statistic is the most easily overlooked, but perhaps the most crucial: silver perpetual contracts saw a 24-hour trading volume of $1.25 billion on Hyperliquid, making it the third most traded asset on the platform, after BTC and ETH. Gold perpetual contracts also saw a trading volume of $131 million.

The most popular trading instruments on cryptocurrency exchanges are gradually being dominated by traditional precious metals.

How did liquidity come about?

Hyperliquid's liquidity growth follows a classic "flywheel effect".

Initially, the platform used the HyperBFT consensus algorithm to achieve a transaction confirmation time of 0.2 seconds, processing 200,000 orders per second. This performance data attracted professional market makers to come and test the waters.

Once market makers discover that "on-chain transactions can be this fast," they will invest more funds to provide liquidity. With increased liquidity, retail and institutional traders will find that slippage is very low and the trading experience is close to Binance, so they will shift their orders there.

With increased trading volume, market makers earned money from commission sharing and continued to increase investment. More funds flowed in, the order book became deeper, and the size of individual trades that could be handled increased. As a result, hedge funds and quantitative trading teams also began to incorporate Hyperliquid into their trading channels.

Currently, Hyperliquid accounts for approximately 70% of the open interest in the decentralized perpetual contract market, several times that of the second-place competitor. This gap is widening.

An "unexpected surge" in precious metals trading

The popularity of gold and silver perpetual contracts seems a bit inexplicable. How did a cryptocurrency exchange become the main venue for precious metals trading?

In 2025, gold rose 67%, the largest annual increase in 45 years. Silver surged even more, rising 145%, and has since gained another 53%, breaking the all-time high of $117 per ounce.

Central banks around the world are buying gold, ETFs are buying gold, and retail investors are also buying gold. "Inflation trading" has become a consensus—everyone believes that as governments print money like crazy, fiat currencies will depreciate, while hard assets will retain their value.

The problem is that traditional financial markets have high barriers to entry, limited leverage, and require KYC for gold futures. On Hyperliquid, however, you can trade gold perpetual contracts with 50-100x leverage, without requiring identity verification, making the capital efficiency ridiculously high.

As a result, a group of hedge funds and commodity traders who were originally trading gold on COMEX (Chicago Mercantile Exchange) began to try opening positions on Hyperliquid. They came in for gold, but soon discovered that "trading BTC and ETH on-chain is so convenient."

This is the logic behind user migration: use a familiar asset (gold) to lure traders from traditional financial markets onto the blockchain, and then let them discover trading opportunities in crypto assets on their own.

TradeXYZ, the largest market deployer of HIP-3, now accounts for 90% of HIP-3 trading volume. Its three largest markets are: XYZ100 (an index tracking the top 100 companies), silver, and Nvidia stock perpetual contracts, with cumulative trading volumes of $12.7 billion, $3 billion, and $1.2 billion, respectively.

This is no longer a "crypto-native" exchange; it's more like a "full asset trading layer."

Valuation Logic and Risks

HYPE tokens surged 50% in a week, returning to around $32. The underlying logic is straightforward: Hyperliquid uses 97% of its protocol fee revenue to buy back and burn HYPE. The higher the trading volume and the more fees generated, the stronger the demand for HYPE buybacks.

When HIP-3 open interest rises from 260 million to 793 million, and when the daily trading volume of silver perpetual contracts exceeds $1.2 billion, these figures will translate into real transaction fee revenue, which will ultimately become buy orders for HYPE.

However, risks are also accumulating. Currently, HYPE's fully diluted valuation (FDV) exceeds $30 billion, which has already fully priced in the expectation that "Hyperliquid will become one of the top three DEXs".

Short-term risks include:

Regulatory pressure is looming. The U.S. SEC or CFTC could exert pressure if they determine that Hyperliquid's precious metals perpetual contracts are "unregistered commodity futures." While decentralized protocols are theoretically "unshutdownable," regulatory pressure could scare away market makers and institutional funds.

Competition is intensifying. Exchanges are eyeing the commodities and US stock markets, and may launch products with lower fees or higher performance at any time.

However, from a trader's perspective, as long as HIP-3 open interest continues to reach new highs, as long as BTC order book depth continues to approach Binance's, and as long as precious metals trading volume continues to grow, HYPE will remain in an upward trend as long as these three indicators hold.

Underlying Logic: A Decentralized "Efficiency Revolution"

The story of Hyperliquid is essentially a "decentralized efficiency revolution".

In the past, the core selling point of decentralized exchanges was "security." When centralized exchanges (CEXs) collapsed, on-chain exchanges became a refuge. This was a passive, defensive value proposition.

Now, leading DEXs are beginning to demonstrate their ability to "proactively attack": using faster speeds, lower slippage, and a wider range of products to directly seize market share from CEXs.

Hyperliquid's daily trading volume has stabilized at 3-5 times that of dYdX, and on some smaller cryptocurrencies, it even approaches Binance's trading depth.

When the experience of on-chain transactions becomes infinitely close to that of centralized exchanges, and when users no longer need to sacrifice efficiency for "decentralization," the power structure of the entire market will be redefined.

The explosion of precious metal perpetual contracts is just the first step in this revolution. As more and more traditional assets have sufficient liquidity on-chain, and as more and more traditional traders discover that "decentralized exchanges can be so useful," the next step will be the full on-chaining of stocks, forex, and commodities.

What Hyperliquid is fighting is more like a quiet infiltration war.

The $793 million in open interest in HIP-3 is just one milestone in this infiltration war.