Project Vision and Ambition

Hyperliquid is positioned as a challenger in the crypto trading space. Its goal is to survive and ultimately surpass the dominance of Centralized Exchanges (CEXs), aspiring to become the "next Binance" while avoiding the pitfalls that led to FTX's collapse.

Development Strategy

* Seizing the window of opportunity (e.g., the market void after FTX's collapse), Hyperliquid strategically entered the market via Perpetual DEXs, gradually expanding into spot trading and Meme coin auctions to build a comprehensive ecosystem.

* It maintains token value and user incentives through an airdrop (31% of $HYPE supply), a buyback mechanism ($1.4B cumulative), and the Hyperliquid Lending Pool (HLP).

* It constructed a multi-layered architecture: the HyperBFT consensus layer, HyperCore (trading layer), and HyperEVM (an open L1), supporting cross-chain assets and front-end revenue sharing (e.g., Builder Codes).

Key Growth Phases

* Starting with an internal test in 2023, Hyperliquid attracted users in 2024 through points seasons and Dutch auction listings.

* Spot trading and the Meme coin frenzy significantly drove user growth.

* Post-token launch, it broke the typical "volume goes to zero" cycle, relying on institutional market makers (like Paradigm) and its buyback mechanism to stabilize the token economy.

Challenges and Risks

* High token concentration and institutional holdings may lead to price volatility.

* Future unlock sell-pressure (e.g., the major $HYPE unlock on November 29th) tests price resilience.

* It must prove its long-term value during bear markets or intense competition, avoiding the "peak at token launch" fate.

Future Outlook

Through systematic operations (like NFT utility and ecosystem expansion), Hyperliquid attempts to replicate Binance's successful path. However, it remains to be seen whether it can truly endure market cycles.

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Summary

An entity, a spectre of hyper-liquidity, is wandering the chains. All the powers of the CEX world have entered into a holy alliance to exorcise this spectre: onshore and offshore entities, Perp DEXs and FTX remnants, Solana radicals, and L2 newcomers.

While the US Dollar anchors traditional liquidity, Hyperliquid has become synonymous with Crypto liquidity. As trading concentrates on mainstream coins like BTC and ETH, people casually overlook how Hyperliquid seized its window to grow into a towering presence.

Many discuss Hyperliquid potentially "flipping" Binance, viewing competitors like Aster as merely the beginning. However, just as the 20x leverage restrictions in 2021 didn't end the competition between FTX and Binance, today's 1001x leverage on Aster won't halt Hyperliquid's stride.

Mystery breeds allure. The Hyperliquid ecosystem is complex; this article focuses solely on how it survived the CEX siege and turned the tables. The lineage of HyperEVM and its DeFi ecosystem, the $HYPE flywheel, the $USDH closed loop, and capital operation stories like ETF and DAT will be detailed in subsequent parts.

The Price of Time

"Do not hate your enemy, it clouds your judgment." The history of finance is as long as the history of arbitrage.

Between CoinDesk's exposé on November 2, 2022, and FTX's bankruptcy filing on November 11, 2022, the attack strategy targeted $FTT's safety as FTX's reserve and Alameda's misuse of user funds. CZ's initial offer to acquire FTX, later withdrawn, disrupted SBF's fundraising efforts. SBF's reported hatred towards CZ during his Middle East fundraising—emotion being the enemy of business—ultimately contributed to FTX's downfall. In hindsight, SBF's ideas (prediction markets, AI investment, Solana, perpetual contracts) were often correct, but the individual was unstable.

After FTX fell, CZ negotiated with US authorities; the price for his "ride first, pay later" approach was $4.2 billion. This high cost, however, didn't secure Binance's dominance—the seed for Hyperliquid was already sown.

Nations perceive a challenger when its GDP reaches ~60% of their own. Similarly, Binance's警戒线 for challengers seems to be around 10% market share. Below this line, competitors like dYdX or FTX were manageable, defended against by Binance mainsite and the BNB ecosystem's ApolloX.

Hyperliquid developed in sync with Binance's rhythm. From its launch in June 2023 to its token launch in November 2024, who remembers CZ was then publicly discussing Bio Protocol and education? Hyperliquid seemed just another token-driven Perp project.

Critically, Hyperliquid's growth flywheel didn't stall after the epic 31% $HYPE airdrop; trading volume genuinely increased afterwards.

Counter-intuitively, while GMX also saw volume spikes pre-token, its price and volume often collapsed post-launch. One can predict that projects like Aster, Avantis, Lighter, Backpack, edgeX, StandX, Drift, or BULK might follow this path. This doesn't mean they aren't good projects or that their tokens aren't tradeable. It simply highlights that Hyperliquid's survival and growth post-token is the anomaly, making its potential to endure cycles and become a core industry pillar worthy of examination.

Other similar projects tend to lose their appeal post-token. Sushiswap could absorb Uniswap's volume, GMX could absorb dYdX's, Blur could absorb OpenSea's. Binance arbitraged the difference between offshore and onshore (Coinbase). The "all-American" SBF tried to arbitrage Binance's regulatory pressures with FTX. Hyperliquid arbitrages the CEXs themselves. A time window is a passive opportunity; active adaptation creates the present.

The concentration of BTC/ETH trading and the Meme frenzy are two sides of the same coin. Precisely because large funds and ETFs dominate mainstream coin prices, the on-chain行情 ignited by Pump.fun emerged. Desperate retail traders facing sanctions like the GameStop "brokerage pull" found Memes unrestricted.

In mid-2024, Hyperliquid pioneered the Dutch auction listing model. Beyond innovating on CEXs' opaque listing processes, this更重要的是 marked Hyperliquid's strategic shift into a dual-track model: both spot and perpetual trading. However, aside from $GOD reaching $100k in late 2024, other auction prices generally stayed low, and most listed tokens in 2024 were "non-mainstream" Memes—a far cry from its current BTC spot volume nearing Binance's.

More accurately, Hyperliquid started as a Perp DEX focusing on low latency, token incentives, and permissionless access—a standard playbook. But by closely following the Meme wave and implementing an auction mechanism, it genuinely broke into the spot market and captured the "retail trader" mindset, subsequently cultivating a complete trading ecosystem.

Tip: Seize the current mainstream trend at the right moment, become synonymous with it, use liquidity to drive traffic, and empower $HYPE—build a system. This approach applies to $USDH and the launch of HyperEVM. "System Thinker" is founder Jeff's hallmark; this methodology is reused across every stage of Hyperliquid's development.

Looking at user growth: the internal test in October 2023 gathered the first 10,000 users. The S1 season (Nov 2023 - May 2024) grew the user base to 120,000. The spot market launch, coupled with Dutch auctions in April/May, created a second peak. During the peak Meme frenzy in late 2024, the $GOD auction and the subsequent listing of $Solv (the first major BTCFi project token) on Hyperliquid's spot market further boosted activity.

While the causality between the spot market and Hyperliquid's user/volume growth cannot be definitively quantified, the timing shows a strong correlation. It's crucial to change the stereotypical view of Hyperliquid: from the very beginning, it was envisioned as a full-scale exchange, merely using Perps as its initial entry point.

Project Vision and Ambition

Hyperliquid is positioned as a challenger in the crypto trading space. Its goal is to survive and ultimately surpass the dominance of Centralized Exchanges (CEXs), aspiring to become the "next Binance" while avoiding the pitfalls that led to FTX's collapse.

Development Strategy

* Seizing the window of opportunity (e.g., the market void after FTX's collapse), Hyperliquid strategically entered the market via Perpetual DEXs, gradually expanding into spot trading and Meme coin auctions to build a comprehensive ecosystem.

* It maintains token value and user incentives through an airdrop (31% of $HYPE supply), a buyback mechanism ($1.4B cumulative), and the Hyperliquid Lending Pool (HLP).

* It constructed a multi-layered architecture: the HyperBFT consensus layer, HyperCore (trading layer), and HyperEVM (an open L1), supporting cross-chain assets and front-end revenue sharing (e.g., Builder Codes).

Key Growth Phases

* Starting with an internal test in 2023, Hyperliquid attracted users in 2024 through points seasons and Dutch auction listings.

* Spot trading and the Meme coin frenzy significantly drove user growth.

* Post-token launch, it broke the typical "volume goes to zero" cycle, relying on institutional market makers (like Paradigm) and its buyback mechanism to stabilize the token economy.

Challenges and Risks

* High token concentration and institutional holdings may lead to price volatility.

* Future unlock sell-pressure (e.g., the major $HYPE unlock on November 29th) tests price resilience.

* It must prove its long-term value during bear markets or intense competition, avoiding the "peak at token launch" fate.

Future Outlook

Through systematic operations (like NFT utility and ecosystem expansion), Hyperliquid attempts to replicate Binance's successful path. However, it remains to be seen whether it can truly endure market cycles.

---

Summary

An entity, a spectre of hyper-liquidity, is wandering the chains. All the powers of the CEX world have entered into a holy alliance to exorcise this spectre: onshore and offshore entities, Perp DEXs and FTX remnants, Solana radicals, and L2 newcomers.

While the US Dollar anchors traditional liquidity, Hyperliquid has become synonymous with Crypto liquidity. As trading concentrates on mainstream coins like BTC and ETH, people casually overlook how Hyperliquid seized its window to grow into a towering presence.

Many discuss Hyperliquid potentially "flipping" Binance, viewing competitors like Aster as merely the beginning. However, just as the 20x leverage restrictions in 2021 didn't end the competition between FTX and Binance, today's 1001x leverage on Aster won't halt Hyperliquid's stride.

Mystery breeds allure. The Hyperliquid ecosystem is complex; this article focuses solely on how it survived the CEX siege and turned the tables. The lineage of HyperEVM and its DeFi ecosystem, the $HYPE flywheel, the $USDH closed loop, and capital operation stories like ETF and DAT will be detailed in subsequent parts.

The Price of Time

"Do not hate your enemy, it clouds your judgment." The history of finance is as long as the history of arbitrage.

Between CoinDesk's exposé on November 2, 2022, and FTX's bankruptcy filing on November 11, 2022, the attack strategy targeted $FTT's safety as FTX's reserve and Alameda's misuse of user funds. CZ's initial offer to acquire FTX, later withdrawn, disrupted SBF's fundraising efforts. SBF's reported hatred towards CZ during his Middle East fundraising—emotion being the enemy of business—ultimately contributed to FTX's downfall. In hindsight, SBF's ideas (prediction markets, AI investment, Solana, perpetual contracts) were often correct, but the individual was unstable.

After FTX fell, CZ negotiated with US authorities; the price for his "ride first, pay later" approach was $4.2 billion. This high cost, however, didn't secure Binance's dominance—the seed for Hyperliquid was already sown.

Nations perceive a challenger when its GDP reaches ~60% of their own. Similarly, Binance's警戒线 for challengers seems to be around 10% market share. Below this line, competitors like dYdX or FTX were manageable, defended against by Binance mainsite and the BNB ecosystem's ApolloX.

Hyperliquid developed in sync with Binance's rhythm. From its launch in June 2023 to its token launch in November 2024, who remembers CZ was then publicly discussing Bio Protocol and education? Hyperliquid seemed just another token-driven Perp project.

Critically, Hyperliquid's growth flywheel didn't stall after the epic 31% $HYPE airdrop; trading volume genuinely increased afterwards.

Counter-intuitively, while GMX also saw volume spikes pre-token, its price and volume often collapsed post-launch. One can predict that projects like Aster, Avantis, Lighter, Backpack, edgeX, StandX, Drift, or BULK might follow this path. This doesn't mean they aren't good projects or that their tokens aren't tradeable. It simply highlights that Hyperliquid's survival and growth post-token is the anomaly, making its potential to endure cycles and become a core industry pillar worthy of examination.

Other similar projects tend to lose their appeal post-token. Sushiswap could absorb Uniswap's volume, GMX could absorb dYdX's, Blur could absorb OpenSea's. Binance arbitraged the difference between offshore and onshore (Coinbase). The "all-American" SBF tried to arbitrage Binance's regulatory pressures with FTX. Hyperliquid arbitrages the CEXs themselves. A time window is a passive opportunity; active adaptation creates the present.

The concentration of BTC/ETH trading and the Meme frenzy are two sides of the same coin. Precisely because large funds and ETFs dominate mainstream coin prices, the on-chain行情 ignited by Pump.fun emerged. Desperate retail traders facing sanctions like the GameStop "brokerage pull" found Memes unrestricted.

In mid-2024, Hyperliquid pioneered the Dutch auction listing model. Beyond innovating on CEXs' opaque listing processes, this更重要的是 marked Hyperliquid's strategic shift into a dual-track model: both spot and perpetual trading. However, aside from $GOD reaching $100k in late 2024, other auction prices generally stayed low, and most listed tokens in 2024 were "non-mainstream" Memes—a far cry from its current BTC spot volume nearing Binance's.

More accurately, Hyperliquid started as a Perp DEX focusing on low latency, token incentives, and permissionless access—a standard playbook. But by closely following the Meme wave and implementing an auction mechanism, it genuinely broke into the spot market and captured the "retail trader" mindset, subsequently cultivating a complete trading ecosystem.

Tip: Seize the current mainstream trend at the right moment, become synonymous with it, use liquidity to drive traffic, and empower $HYPE—build a system. This approach applies to $USDH and the launch of HyperEVM. "System Thinker" is founder Jeff's hallmark; this methodology is reused across every stage of Hyperliquid's development.

Looking at user growth: the internal test in October 2023 gathered the first 10,000 users. The S1 season (Nov 2023 - May 2024) grew the user base to 120,000. The spot market launch, coupled with Dutch auctions in April/May, created a second peak. During the peak Meme frenzy in late 2024, the $GOD auction and the subsequent listing of $Solv (the first major BTCFi project token) on Hyperliquid's spot market further boosted activity.

While the causality between the spot market and Hyperliquid's user/volume growth cannot be definitively quantified, the timing shows a strong correlation. It's crucial to change the stereotypical view of Hyperliquid: from the very beginning, it was envisioned as a full-scale exchange, merely using Perps as its initial entry point.