Hyperliquid Review: A Closer Look at Its Tech And Trading Features

Many decentralised exchanges struggle with liquidity, high transaction fees, and clunky user experiences, leaving traders with little choice but to stick with centralised exchanges like Binance and Bybit.

Hyperliquid believes it has cracked the code. Unlike most DEXs, which rely on existing blockchain networks, Hyperliquid has built its own custom Layer-1 blockchain designed from the ground up for high-frequency trading. The result? A blazing-fast order book DEX, boasting $12 billion in daily volume, near-instant transactions, and a trading experience that rivals CEXs while remaining fully on-chain.

But Hyperliquid’s rapid rise hasn’t come without controversy. The project claims to have launched without any VC funding, ICO, or pre-sale, making it one of the few major crypto platforms to do so. Instead, its native token, HYPE, was airdropped to early adopters, fueling its rapid adoption. Yet, questions remain about who exactly is behind Hyperliquid—and whether its so-called decentralisation is as real as it claims.

So, is Hyperliquid the future of decentralised trading, or just another crypto experiment with hidden centralisation risks? Today, we’re diving deep into who’s behind it, how it works, and whether it can live up to the hype.

Hyperliquid’s Origins and Team

The story of Hyperliquid begins with Jeffrey Yan, a Harvard graduate with a background in mathematics, algorithmic trading, and software development. Before diving into crypto, Jeff worked at Google and a proprietary trading firm called Hudson River Trading, where he specialized in building high-frequency trading (HFT) algorithms—an experience that would later shape Hyperliquid’s architecture.

Jeff first became interested in crypto in 2018 after discovering Ethereum and its potential for decentralised applications. His first attempt at building in the space was a Layer-2 prediction market on Ethereum, but after a few months, he abandoned the project. Instead, he returned to what he knew best—trading.

In early 2020, Jeff founded Chameleon Trading, a proprietary crypto trading firm and market maker. According to him, Chameleon grew into a major player in the space, but curiously, there is almost no public information about it. The firm’s website, now offline, contained only a single sentence: “Global proprietary trading and investment firm.” There’s no LinkedIn profile, no company details, and no official records of its trading activity.

By late 2022, Chameleon Trading had turned its attention to DeFi, noticing that despite the crypto bear market, decentralised exchanges were still pulling in significant trading volume. The collapse of FTX, one of the largest centralised derivatives exchanges, left a massive gap in the market—a gap that Jeff and his team saw as an opportunity.

This led to the birth of Hyperliquid, a decentralised derivatives exchange designed to offer the same speed, efficiency, and deep liquidity as centralised exchanges, but without the risks of custody and opaque balance sheets.

Hyperliquid's Unique Funding Model

We can’t talk about Hyperliquid without touching on its controversial funding.

One of the boldest claims Hyperliquid makes is that it launched without any VC funding, ICO, or pre-sale. This is almost unheard of in the crypto space, where most projects rely on early-stage venture capital or token sales to bootstrap development and provide liquidity. Instead, Hyperliquid took a different approach: a massive airdrop of its native token, HYPE, to early adopters—instantly creating a large, engaged user base without selling tokens to insiders.

At first glance, this appears to be a fair launch, reinforcing Hyperliquid’s decentralised ethos. However, when you look deeper, the question of who actually funded Hyperliquid’s development and initial liquidity remains unanswered.

Building a custom Layer-1 blockchain, deploying an advanced order book-based DEX, and onboarding users without external funding is no small feat. Without VC funding, the most logical source of capital would be Chameleon Trading—the market-making firm that Hyperliquid’s founder, Jeffrey Yan, ran before launching the exchange. Given Chameleon’s supposed success as a trading firm, it’s plausible that the team self-funded Hyperliquid using trading profits.

But if that’s the case, this raises another question: Did Chameleon Trading—or other insider entities—receive a large portion of the HYPE airdrop?

This has led some to speculate that a significant portion of the airdrop was claimed by Chameleon Trading or other market-making entities, meaning insiders still control a large amount of HYPE, despite the appearance of decentralization.

That said, this remains speculative, and if proven false, it would be a refreshing change in a space where early-stage VC funding tends to dominate.

DEX vs. CEX

Decentralised exchanges (DEXs) have long struggled to compete with centralised exchanges (CEXs) when it comes to speed, liquidity, and user experience. While DEXs offer the advantage of self-custody and censorship resistance, they often suffer from high gas fees, slow transaction times, and fragmented liquidity.

Hyperliquid aims to bridge this gap by offering the best of both worlds—the speed and efficiency of a centralised exchange, combined with the transparency and non-custodial nature of a DEX. 

To understand what makes Hyperliquid different, let’s briefly break down how CEXs and DEXs differ from each other:

The Hyperliquid Blockchain – A Technical Deep Dive

Unlike most decentralised exchanges, which are built on existing blockchain networks like Ethereum or Solana, Hyperliquid has taken a different approach—it operates on its own custom-built Layer-1 blockchain which gives it an edge in terms of speed, efficiency, and cost.

Hyperliquid’s blockchain is powered by two key components:

• HyperEVM – A custom-built Ethereum Virtual Machine (EVM) that allows Hyperliquid to support Ethereum-compatible smart contracts while integrating directly with its order book and trading infrastructure.
   
• HyperBFT – A unique Byzantine Fault Tolerant (BFT) consensus mechanism, designed to handle high-frequency trading with ultra-low latency.

Together, these systems enable Hyperliquid to process over 200,000 transactions per second (TPS), with an average block time of just 0.2 seconds—making it one of the fastest blockchains in the industry.

HyperEVM

Hyperliquid’s HyperEVM is an Ethereum-compatible execution layer, but unlike other EVM implementations, it operates within the same consensus layer as Hyperliquid’s L1. This allows for:

• Seamless integration with Hyperliquid’s order book, enabling smart contracts to interact directly with trading functions.
   
• Predictable execution, since the HyperEVM processes transactions sequentially, ensuring minimal state discrepancies.
   
• Fungibility between ERC-20 tokens and Hyperliquid’s native assets, allowing for deep liquidity and efficient settlement.

At the moment, HyperEVM is not fully general-purpose, meaning users can’t simply deploy any smart contract they want. 

HyperBFT

HyperBFT is Hyperliquid’s custom consensus algorithm, inspired by the Hotstuff protocol used in some other high-performance blockchains. It was designed specifically to handle high-frequency trading, ensuring rapid finality while maintaining security.

Here’s what makes HyperBFT unique:

• Sub-Second Block Confirmation – Transactions settle in under a second, with an average latency of just 0.2s.
   
• High Throughput – The network is capable of scaling beyond 200,000 orders per second.
   
• Byzantine Fault Tolerance (BFT) – It can tolerate up to one-third of malicious validators while maintaining network integrity.

This impressive speed, however, comes at a cost—decentralization. When Hyperliquid first launched, it operated with just four validators, a figure that has since increased to 16.

How to Fund and Trade on Hyperliquid

Despite its cutting-edge technology, Hyperliquid is not the most beginner-friendly platform. Unlike traditional DEXs, which often rely on simple swap interfaces, Hyperliquid functions more like a centralised exchange with an order book system—meaning users must first fund their accounts before trading.

There are two primary ways to deposit funds into Hyperliquid:

• From a centralised exchange like Coinbase or Binance
   
• Swapping assets via a decentralised wallet, such as Phantom or Metamask

Here’s how each method works.

Depositing from a Centralised Exchange

For those starting with fiat or crypto on a centralised exchange, the process is relatively straightforward. Hyperliquid does not support direct fiat deposits, so the best approach is to buy USDC on a CEX and transfer it to an Arbitrum-compatible wallet before funding a Hyperliquid account.

• Buy USDC on a CEX – Platforms like Binance, Coinbase, or Kraken allow users to purchase USDC with fiat or other cryptocurrencies.
   
• Withdraw USDC to an Arbitrum-compatible wallet – Before withdrawing, ensure the receiving wallet supports Arbitrum One. Metamask is the most widely used option.
   
• Transfer USDC to Hyperliquid – Once the funds are in Metamask, head to Hyperliquid’s deposit page, connect the wallet, and transfer USDC into the exchange’s trading account.

Once deposited, the USDC will appear in the Perpetuals (PERP) account by default. If the goal is spot trading, the funds must be transferred to the Spot Wallet. This is done through the internal transfer feature on the platform.

Depositing from a Decentralised Wallet

For those already holding crypto in a self-custodial wallet, Hyperliquid can be funded using decentralised swaps.

• Convert crypto to USDC – If holding assets like ETH or SOL, use a decentralised exchange like Uniswap to swap them for USDC on the Arbitrum network.
   
• Use a cross-chain bridge if necessary – If the USDC is on another network, a cross-chain bridge such as Mayan Swap can be used to move it to Arbitrum.
   
• Deposit USDC into Hyperliquid – Similar to the CEX method, the funds must be transferred from the wallet to Hyperliquid’s trading account.
   

Hyperliquid's Trading Features

Hyperliquid sets itself apart from most decentralised exchanges by offering a diverse set of trading options beyond simple spot trading. While most DEXs rely on automated market maker (AMM) models, Hyperliquid uses a fully on-chain order book, enabling advanced trading features typically only found on centralised exchanges.

Spot Trading

Hyperliquid’s spot trading market is relatively small, with just over a dozen trading pairs available.

Despite its limited selection, Hyperliquid’s spot market benefits from its order book system, allowing traders to place market, limit, stop-limit, and TWAP orders—features that most AMM-based DEXs lack.

However, spot trading is not Hyperliquid’s primary focus. The platform’s real strength lies in its derivatives trading capabilities.

Perpetual Futures

Hyperliquid is primarily designed for perpetual futures trading, offering up to 50x leverage—a feature usually reserved for centralised exchanges.

Unlike traditional futures contracts, perpetual futures have no expiry date, meaning traders can hold positions indefinitely as long as they maintain margin requirements.

Key features of Hyperliquid’s perpetuals market include:

• Hundreds of trading pairs, including BTC, ETH, SOL, XRP, and DOGE.
   
• Isolated and cross-margin options – Allowing traders to manage risk across multiple positions.
   
• Automated liquidations – A system that ensures positions are closed before margin requirements are breached.

These features make Hyperliquid one of the most advanced DEXs for derivatives trading, offering a CEX-like experience without requiring KYC or custodial risk.

Hyperliquid’s Meme Coin Launcher: Hypurr.fun

In response to the growing popularity of meme coins, Hyperliquid has introduced Hypurr.fun, a dedicated meme coin launchpad.

Hypurr.fun allows users to:

• Create and trade new memecoins and AI agents directly on Hyperliquid.
   
• Use a built-in Telegram trading bot for fast execution.

It’s similar in nature to Pump.fun on Solana, but whether it can attract the same level of attention remains to be seen—especially in light of recent scandals, such as the failed Libra memecoin launch and allegations of insider selling surrounding Trump’s own memecoin.

Hyperliquid’s Trading Fees

Hyperliquid operates on a tiered fee structure based on a rolling 14-day trading volume, with sub-account volumes consolidated under the master account. Unlike most exchanges, where fees primarily benefit insiders, Hyperliquid directs all fees to the community through the HLP and assistance fund.

Below are the fee rates based on the tiered fee structure:

The HYPE Token and Tokenomics

At the heart of Hyperliquid’s ecosystem is HYPE, its native token and like many exchange tokens, HYPE plays a key role in staking, governance, and trading incentives.

HYPE’s Utility

HYPE is designed to serve multiple purposes within the Hyperliquid ecosystem. According to the documentation, the token is used for:

• Staking – Validators and delegators stake HYPE to secure the network and earn rewards.
   
• Governance – HYPE holders are supposed to have a say in protocol decisions, although no clear governance framework has been outlined to date.
   
• Gas Fees – While trading on Hyperliquid is gas-free, transactions on the HyperEVM require HYPE as a gas token.
   
• Trading Fee Incentives – Some secondary sources claim that a portion of trading fees is used to buy back and burn HYPE, though this is not explicitly stated in official documentation.

HYPE’s Token Distribution

Hyperliquid’s token allocation is as follows:

• 38% – Future emissions and community rewards, including staking incentives.
   
• 31% – Genesis Distribution, primarily through the HYPE airdrop to early users.
   
• 23.8% – Contributors, which likely includes the core team and developers.
   
• 6% – Hyperliquid Foundation.
   
• Remainder – Allocated to “Hyper Liquidity,” a vaguely defined category.

Contributor tokens are locked for one year after the Genesis distribution, with vesting schedules extending until 2028 or beyond. 

Staking 

Hyperliquid recently introduced HYPE staking, allowing validators and delegators to secure the network in exchange for rewards. However, the staking model has some notable trade-offs:

• Minimum Validator Stake – The minimum validator stake is set at 10,000 HYPE, with users having the option to delegate their tokens to validators. However, the documentation does not specify a minimum delegation amount
   
• Lockup Periods – Delegation has a one-day lockup, but moving staked HYPE to a spot account requires an additional seven-day withdrawal period.
   
• Annual Staking Rewards – Only 2.3% per year for both validators and delegators, which is significantly lower than most staking-based networks.

Challenges Facing Hyperliquid

While Hyperliquid has made significant strides in building a high-performance decentralised trading platform, it is not without its flaws. Let’s take a closer look at some of the key challenges it faces.

Centralization and Transparency Concerns

One of the biggest concerns surrounding Hyperliquid is its lack of transparency, particularly regarding who controls the network and how governance is handled.

• Unclear Governance – While HYPE is supposed to be a governance token, there is no governance dashboard, no voting history, and no clear mechanism for community proposals at this stage. This suggests that decision-making remains centralised within the core team.
   
• Validator Centralization – Due to Hyperliquid’s focus on speed and efficiency, its Layer-1 blockchain remains highly centralised even after increasing its validator count from four to sixteen.

User Experience Hurdles

Hyperliquid is one of the most advanced trading platforms in DeFi, but its complexity makes it difficult for new users to navigate.

Some of the biggest UX challenges include:

• Funding difficulties – Unlike CEXs, Hyperliquid does not support fiat deposits, requiring users to buy USDC on a separate exchange, bridge it to Arbitrum, and then deposit it into the platform. This multi-step process adds friction for new users.
   
• Lack of multi-chain support – Unlike other DEXs that operate across multiple blockchains, Hyperliquid only supports Arbitrum for deposits. This limits interoperability and makes funding more complicated compared to platforms with native multi-chain support.

These factors may limit adoption among retail traders, particularly those who prefer simpler DeFi platforms like Uniswap or GMX.

Hyperliquid’s Roadmap

Unlike many crypto projects that release detailed roadmaps, Hyperliquid has taken a more fluid approach to development, with its team preferring to adapt based on market conditions rather than committing to strict timelines. However, insights from interviews with Hyperliquid’s founder, Jeff Yan, provide clues about upcoming milestones and long-term ambitions.

Mobile App Development

One of the most highly anticipated updates is the launch of a Hyperliquid mobile app. Given that many traders prefer mobile-friendly platforms, this could significantly increase adoption and engagement.

However, crypto-related apps often face strict regulations on app stores, particularly from Apple and Google, which have previously restricted DeFi applications for compliance reasons.

In an interview, Jeff Yan acknowledged that getting approval for a fully functional trading app will be difficult, but the team is working on it. If successful, this could widen Hyperliquid’s user base and improve accessibility, making it a more competitive alternative to centralised exchanges.

Native USDC Integration

Currently, one of the biggest friction points for new users is the need to bridge USDC from Arbitrum before trading on Hyperliquid. This adds an extra layer of complexity that could deter mainstream adoption.

To address this, Hyperliquid plans to integrate native USDC via Circle’s CCTP (Cross-Chain Transfer Protocol). This means:

• Users will be able to fund their Hyperliquid accounts with USDC from any chain.
   
• The reliance on third-party bridges like Mayan Swap will be reduced.
   
• The onboarding experience will become much smoother for new users.

If successfully implemented, this could remove one of Hyperliquid’s biggest barriers to entry, making it far more accessible to both retail and institutional traders.

Governance

One of the biggest unanswered questions surrounding Hyperliquid is whether its governance model will ever be properly implemented.

While HYPE is theoretically a governance token, its governance features are currently absent. This has led many to speculate that Hyperliquid’s governance is currently centralised within the core team.

In the long term, introducing a proper governance system could improve transparency and decentralization.

Closing Thoughts

Hyperliquid has emerged as one of the most advanced decentralised trading platforms, combining CEX-level speed and efficiency with the self-custody and transparency of DeFi. By building its own Layer-1 blockchain, introducing a fully on-chain order book, and offering gas-free trading, Hyperliquid has created a DEX unlike any other.

However, its rapid rise has not come without controversy. Questions about insider control, validator centralisation, and governance opacity raise concerns about whether Hyperliquid is truly as decentralised as it claims. The lack of fiat on-ramps and multi-chain support could also limit its ability to scale beyond experienced crypto traders.

That being said, Hyperliquid’s technology is undeniably impressive. If it can address concerns about transparency, accessibility, and governance, while continuing to outpace competitors in trading performance, it could become a dominant force in decentralised finance—perhaps even challenging centralised exchanges in the long run.

As always, only time will tell.