Hyperliquid is at the top of the DEX perp market, and HYPE is over 300%. With only 21 validators and a $38 billion valuation, some people wonder if the growth is sustainable.
Hyperliquid is experiencing a moment. Since its local low in April, HYPE (HYPE) has risen more than 300% in just two months, reaching an all-time high on June 17 before dropping somewhat. Meanwhile, the layer-1 blockchain it underpins has quietly emerged as a major player in DeFi.
The numbers are self-evident. According to DefiLlama, Hyperliquid now has $1.75 billion locked, placing it eighth out of all blockchains in terms of total value locked (TVL). With a daily volume of approximately $420 million, its flagship product, a high-performance DEX, now ranks sixth among all decentralized exchanges.
The Lion Group, which is listed on the Nasdaq, recently declared that HYPE will be its main treasury asset and that it will maintain $600 million in reserves.
The momentum is growing. However, the issue still stands: is this just another hype cycle, or are the token's explosive rise backed by fundamentals?
Why is Hyperliquid unique?
One of the few significant cryptocurrency ventures to emerge without outside backing is Hyperliquid, which was started in 2023 by Harvard classmates Jeff Yan and Iliensinc.
The ambitious objective of Hyperliquid is to replicate the speed and ease usually found on centralized platforms while providing the transparency and self-custody of a decentralized exchange. With features like one-click trading, direct payments from more than 30 networks, and access to spot, margin, and perpetual markets, the DEX does, in fact, provide a seamless experience in practice. By providing perpetual contracts linked to token prices rather than the tokens themselves, it notably avoids the difficulty of bridging assets. This design prioritizes efficiency but restricts cross-chain interoperability and composability. Additionally, it gives price oracles and funding rate processes a great deal of credibility.
This DEX is based on the Hyperliquid blockchain, a specialized layer-1 that uses HyperBFT, a Byzantine fault tolerance (BFT) consensus variation. The protocol promises to accommodate up to 200,000 transactions per second and depends on quick, high-volume communication between nodes. Decentralization is the price paid for this throughput, though. Ethereum has 14,200 execution-layer nodes, although the network only has 21 delegated validators at the moment.
When daily trade volume increased tenfold, from $2 billion to over $20 billion, in November 2024, the platform reached a pivotal moment. Today, it has over half a million users.
HYPE tokenomics
It's one thing to create a fantastic product. It's quite another to monetize it in a way that helps tokenholders in a significant way.
In November 2024, the HYPE token went live via airdrop, giving users access to 31% of the 1 billion token supply. Within a month, the airdrop's value had risen to $11 billion, making it the most valuable in history to date. With a market value of $12.4 billion, 334 million HYPE tokens currently have a fully diluted valuation of over $38 billion.
HYPE is the Hyperliquid chain's governance asset in addition to its gas token. It can be staked directly or through validation on the platform.
The question remains, though: Is it worthwhile to own HYPE in the long run?
Simon Dedic, CEO of Moonrock Capital, has expressed his skepticism about X:
“I love Hyperliquid. I genuinely appreciate everything they’ve built and honestly believe it’s one of the best projects in all of crypto. But seriously - who’s buying HYPE at nearly $50B [of fully diluted valuation]? How is the risk/reward ratio still even remotely reasonable here?”
Crypto expert Ansem was among the people who responded with strong opinions, claiming that value concerns ignore Hyperliquid's performance and the industry's potential.
For example, just 10% of Binance's worldwide volumes are now controlled by Hyperliquid, despite controlling 70% of all decentralized perpetual trading. Closing that gap has enormous benefits, particularly if the US regulatory environment improves.
The HYPE supply is also meticulously controlled. About 97% of platform fee revenue has been reinvested in HYPE over the last six months, totaling $910 million in HYPE buybacks through Hyperliquid's Assistance Fund. The majority of the team's tokens (23.8% of the entire supply) are vested until 2027–2028, meaning that just 34% of the total supply is now in circulation. Additionally, about 39% of the entire supply is set aside for "community awards," which will be given out over time. Additionally, there is no outside compulsion to sell tokens because the initiative has never raised money from venture capitalists.
Given this, the completely diluted valuation of $38 to $45 billion may seem excessive, but it isn't inherently unreasonable, especially for long-term investors who think the protocol will develop as planned. Current purchases, according to Ansem, probably comprise ETH or SOL whales rotating into what they perceive to be the next dominant trading layer, TradFi analysts using P/E logic to cryptocurrency, and late-stage VCs excluded from early rounds.
Hyperliquid seems to be in a good position to draw in investment. However, that isn't always advantageous. Investors and users have repeatedly chosen centralized platforms due to their convenience, only to be reminded subsequently that decentralization is a resilient design decision rather than just an ideological preference. The risk of centralization rarely matters until it does.
