Hyperliquid is changing how crypto projects distribute their tokens. On November 1st their native HYPE token launched to the public with a historic airdrop. This transition, along with groundbreaking tokenomics, paves the way for a first-of-its-kind decentralized perpetual exchange (Perp DEX). Hyperliquid’s success is a great example that all growth doesn’t have to be bought, especially in the crypto space dominated by community-building.
The platform’s extreme user-first approach has quickly grown to be the backbone of its skyrocketing growth and market dominance. In less than a year, Hyperliquid would increase its market share from 10% to a stunning 70%. It’s the platform’s innovative approach that really makes it stand out from the competition in the decentralized perpetual exchange (Perp DEX) space. This one proven strategy ensures a big and vibrant ecosystem.
Record-Breaking Airdrop and Community Focus
Hyperliquid has already transitioned 27.5% of its total supply to more than 94,000 users who claim their share. This airdrop, which in total was worth more than $7.5 billion, is the largest in crypto history. By rewarding early and loyal users equally, regardless of their holdings, Hyperliquid has fostered a strong, community-driven ecosystem. Beyond being the right thing to do, this approach fits with its ethos of democratizing access and putting its users before Wall Street.
Hyperliquid’s record-breaking airdrop, community-first tokenomics, and product-first approach have already raised the bar in the Perp DEX ecosystem. The platform's commitment to its users is evident in its decision to exclude venture capitalists (VCs) from the token distribution. This change has been warmly welcomed by the community. They view the strategy as a method to promote fair, broad distribution of their token.
Further proof of Hyperliquid’s dedication to its users, dubbed Hyperliquiders, the HYPE Assistance Fund is an amazing initiative. Any unallocated fund is held in reserve to protect users who have experienced sudden unexpected market volatility or events beyond their control. This reflects Hyperliquid’s commitment to building a safe and inclusive space for their users.
Innovative Tokenomics and Sustainability
Hyperliquid’s groundbreaking tokenomics has everyone talking. Most are trying to determine if it’s special model, which includes the exclusion of VCs but does include their HYPE Assistance Fund, can be copied on other projects. Hyperliquid has developed an incredibly capital efficient model that maximizes token value. It reinvests that revenue back into the ecosystem to further incentivize user participation. On the business end of things, the marketplace’s infrastructure can scale to handle 100,000 orders per second.
Hyperliquid’s buyback model protects token holders by stabilizing token value and preventing market manipulation. This model involves using a portion of the platform's revenue to buy back HYPE tokens from the open market, reducing the circulating supply and potentially increasing the token's value. This strategy is a clear sign of Hyperliquid’s long-term value creation commitment to its community.
The platform’s commitment to sustainability goes beyond food production, though. It demonstrates this commitment by using 35% of its net revenue to establish the HYPE Assistance Fund. This fund helps us give back to our loyal users who have been negatively impacted by market volatility or other unexpected incidents. By continually reinvesting revenue back into the ecosystem, Hyperliquid is building a safer, more sustainable, and more resilient platform for its users.
Security and Centralization Concerns
Hyperliquid, like all exchanges, has to contend with security and centralization issues. The platform’s deployment with just 16 validators dwarfs most platforms in its fragility and vulnerability to attack. History has shown that the platform has not seen a major security breach to date. Such concentration of power in so few validators would be a clear target area for malicious actors.
The platform’s centralized nature poses serious long-term sustainability concerns. Despite Hyperliquid’s moves to decentralize governance of the protocol, operationally, the platform currently remains highly centralized and governed by its core team. Doing so would open the door to serious conflicts of interest down the line. The team’s goals could be misaligned with the interests and needs of the community.
Hyperliquid has shown a reassuring focus on transparency and security. The platform has received ongoing security audits and has taken many steps to secure their user’s funds. Hyperliquid’s team is expanding, too. To sustain this momentum, the platform should continue to focus on these areas of concern and decentralize its development and decision-making operations even more.
