What is Hyperliquid? A derivative DEX platform operating on Layer 1 of the same name.

Hyperliquid is a derivative DEX that allows users to long/short many different types of assets with a maximum leverage of x50. In addition, Hyperliquid operates on Layer 1 of the same name developed by the project itself called Hyperliquid L1 to bring the best derivatives trading user experience. Let’s learn about the Hyperliquid project with Coin68 through the article below!

What is Hyperliquid? 

Hyperliquid is a decentralized exchange (Perpetual DEX) built on a blockchainLayer 1of the same name, specializes in derivatives trading, allowing users to execute long/short orders with leverage up to x50.

What is Hyperliquid?
Hyperliquid L1 is built on Cosmos’ Tendermint toolkit and uses a consensus mechanism Proof of Stake and is optimized to run fully on-chain transactions with high throughput and low latency, providing a smooth and transparent trading experience. In addition to derivatives trading, Hyperliquid also supports spot trading, a Vault mechanism for automated copy trading, and features such as a rewards system, referral program, and portfolio tracking capabilities. The ecosystem’s governance token, HYPE, is used for staking, payment of trading fees, and has potential for network governance and incentive programs.

Hyperliquid products

Hyperliquid L1

The project has developed its own Layer 1 blockchain called Hyperliquid L1 based on the Tendermint toolkit of Cosmos and operate with consensus mechanism Proof of Stake. Hyperliquid L1 will enable Hyperliquid’s order-book mechanism to operate fully on-chain to eliminate dependence on other centralized entities. Hyperliquid emphasizes decentralization when realizing that some other derivative DEXs using off-chain orderbook mechanisms to process transactions will manipulate order results leading to a lack of transparency to users.

Hyperliquid L1 is highly customizable and focused on running an efficient derivatives DEX rather than supporting general purpose smart contracts. This allows Hyperliquid to optimize performance and throughput to create a powerful derivatives DEX that competes with CEXs.

For example, Hyperliquid L1 works in a similar way.dYdX chain to optimize for the dYdX derivative DEX. For Layer 1s that support smart contracts for general purposes such as token swapping, NFT minting, gaming item trading, these can be mentioned as Ethereum, BNB Chain, Solana,…

Additionally, Hyperliquid L1 has a highly customized architecture that can handle 20,000 TPS including placing, canceling, and liquidating orders with an average network latency of 0.2 seconds. This shows that Hyperliquid L1 has 20x higher throughput than Tendermint which only handles over 1,000 TPS.

Hyperliquid Perpetual DEX

This is a derivatives DEX that allows users to long/short various assets with a maximum leverage of x50. The features that Hyperliquid develops include Trade, Vault, Portfolio, Referrals and Points.

Hyperliquid Derivative DEX Exchange Interface

Perpetual Trading

This is a feature that allows users to long/short many types of assets with many different types of orders similar to CEX, DEX exchanges including:

• Market: This is an order that is executed immediately at the current market price.

• Limit: This is an order that executes at the price the user has selected.

• Stop Market: This is an order where the user simply selects a stop price and the order will automatically be filled at the best available price. 

• Stop Limit: This is an order where the user needs to select both the stop price and the limit price to activate. For example, BTC is at $60,000 and you set a stop limit order at a stop price of $59,000 and a limit price of $58,000. The limit order at $58,000 will be placed when the price drops from $60,000 to $59,000.

• Scale: These are multiple orders placed by the user within a certain price range. 

• TWAP: This is a large order that is divided into smaller orders and they will be executed within a period of 5 minutes to 24 hours depending on the current price of the asset. TWAP small orders have a maximum slippage of 3%.

Types of trading orders in Hyperliquid

In addition, Hyperliquid’s trading interface is designed to be user-friendly and extremely convenient when the platform displays tokens in each area such as AI, Layer 1, DeFi,… Especially the Pre-launch section with tokens not listed on any CEX, DEX and Hyperliquid is supporting users to trade ZRO tokens which are said to be from the LayerZero project. 

Token categories on Hyperliquid

Pre-launch section with ZRO token is said to be from LayerZero

Spot Trading

This feature allows users to instantly buy or sell assets with 3 types of orders: Limit, Market and Scale. Currently, Hyperliquid only supports PURR tokens for spot trading with the token standard being HIP-1.

PURP Token supports spot trading

Hyperliquid supports native spot trading with 2 permissionless token standards including:

• HIP-1: Is a native token standard deployed on Hyperliquid L1 for spot orderbook trading. This token standard will open up the ability for bridges to transfer assets between Hyperliquid L1 and other chains.

• HIP-2: Is a permanent liquidity commitment token standard for liquidity source with HIP-1 spot orderbook. 

For example, PURR Token is the first HIP-1 token to be launched for spot trading on Hyperliquid with 50% of the total supply allocated to point holders. With the remaining 50% of the total supply permanently committed as liquidity for the PURR/USDC pair, it is a HIP-2 token. 

PURR tokens have been airdropped by Hyperliquid to users who own points when participating in transactions or depositing money into Vaults on the platform.

Vault

With regular DEX or derivative DEX, Vault is another name for liquidity pool where users deposit assets to earn profits. However, Vault in Hyperliquid is where users’ money can automatically trade according to orders in Vault like Copy Trading of CEX exchanges.

By depositing funds into the Vault, users earn a portion of the profits or may lose money if the long/short positions in the Vault are not performing well. If there are specific traders that users admire, they can deposit funds into the Vault to gain exposure to that trader’s trading strategies.

For example: you deposit 100 USDC into a Vault with a total deposit of 1000 USDC, then you own 10% of the assets in the Vault. Over time, long/short orders gradually become positive and the Vault value increases to 2,000 USDC, then you choose to withdraw money to make a profit. You withdraw 200 USDC equivalent to 10% minus 10 USDC because you have to share 10% with the Vault creator, then your profit is 190 USDC. However, the number may change due to slippage and fees when you withdraw money.

Hyperliquidity Provider (HLP) is a Vault created by Hyperliquid itself to perform market making (MM) and also act as a trader in the platform. Users can deposit funds into the HLP Vault for safety or the Vault is opened by individual traders.

Vault trong Hyperliquid

Portfolio

This is where users can track the long/short orders they have opened with information such as PnL (Profit and Loss), trading volume, leverage,…

Portfolio feature on Hyperliquid

Referrals

This is where users can send their referral link or invitation code to others to join and receive commission when they trade on Hyperliquid. However, users need to open long/short orders with a trading volume of 10,000 USD to generate an invitation code. 

Referrals System on Hyperliquid

Points

This is a reward point for users who trade long/short or deposit into Vault on Hyperliquid and it will be distributed every Thursday. The reward point program was launched by Hyperliquid from 01/11/2023 and will last for 6 months and is expected to end on 01/05/2024. 

Points System on Hyperliquid

Additionally, point holders will receive the first airdrop of PURR tokens that support spot trading on Hyperliquid.

Hypurr.fun

Hypurr.fun is a product of Hyperliquid, offering a similar experience pump.fun when allowing users to create and trade memecoin easy. However, Hypurr.fun is different in that it only works through Telegram Bot, without having to visit the website. The platform uses the Bonding Curve model, a mechanism that helps determine the relationship between the supply and price of an asset, to limit risk.Back Pull. In addition, to limit PvP in the community, Hypurr.fun also uses the Auction feature of memecoin names before they are listed on Hyperliquid after reaching the target capitalization.

Hypurr.fun

Basic information about HYPE token

HYPE Token Specifications

HYPE Token Allocation

Currently, the project has not announced the HYPE token allocation ratio. Coin68 will update as soon as there is the latest information from the project.

Uses of HYPE token

– Proof of Stake consensus : Users can stake HYPE tokens to participate in transaction validation and network security, and receive rewards from the system.

– Mechanism HyperEVM: HYPE is used in HyperEVM for payment transaction feeand make utility tokens for the Dapp built on the Hyperliquid blockchain.

– Future Development : HYPE has potential for governance functions, liquidity provision and incentive programs within the Hyperliquid ecosystem.

HYPE token airdrop event

Hyperliquid’s HYPE Token Airdrop Announcedon October 14, 2024 with the following objectives and conditions:

– Purpose and management : Hyperliquid established the Hype Foundation to manage and allocate HYPE tokens, as well as support the development of the Hyperliquid ecosystem. The Hype Foundation will take charge of token-related activities after the airdrop event.

– Airdrop eligibility : Users will be considered for the HYPE airdrop based on their activity history on the platform. To be eligible, users must read and agree to the airdrop terms before November 11, 2024. Details on token allocation have not been announced yet.

Hyperliquid Project Development Roadmap

Hyperliquid Project Development Roadmap

Q4 2022

• Testing Phase on Arbitrum Goerli : This is the Proof of Concept phase for Hyperliquid’s derivative DEX.

• Migration to Hyperliquid L1 : Project moves to Hyperliquid Layer 1 development capable of supporting 20,000 orders per second with order book and on-chain matching

Q4/2022 – Q1/2023

• Layer 1 Testing Phase : The project transitions to its own blockchain, Hyperliquid Layer 1, and develops features like Vault (formerly known as strategy pool) during this phase.

Q1/2023 – Present

• Mainnet alpha phase : Launch Hyperliquid on mainnet in closed alpha. Referrals and Protocol Vaults are also implemented during this phase.

Development Team

Hyperliquid Labs is the development team of Hyperliquid led by Jeff and iliensinc. They are classmates from Harvard University and other members of Hyperliquid Labs have extensive experience working at technology and finance companies such as Airtable, Citadel, Hudson River Trading and Nuro.

Investor

Currently, Hyperliquid has not announced information about investors in the funding rounds. Coin68 will update as soon as there is the latest information from the project. 

Partner

Hyperliquid is currently collaborating with projects such as: Rage Trade, Mizar, Hummingbot, Okto,…

Summary

Hyperliquid is a derivatives DEX that allows users to long/short various assets with a maximum leverage of x50. The project team developed its own Layer 1 called Hyperliquid L1 to improve user experience in derivatives trading.

Through this article, you have probably grasped some basic information about the Hyperliquid project to make your own investment decisions. 

Note: The information in the article is not considered investment advice, Coin68 is not responsible for any of your decisions.

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