As DeFi investors prepare for the HYPE token launch, what has made Hyperliquid capture so much attention?

In just two years, Hyperliquid has quickly become a leading protocol in the crypto derivatives market, becoming one of the most active decentralized exchanges for perpetual contracts. In the blockchain space, Hyperliquid has uniquely adopted a product-first strategy, achieving organic growth without significant incentives and maintaining financial independence as a fully self-funded team. This week alone, it processed $21 billion in trading volume, and its market share of perpetual contract trading tripled this year, rising from about 11% in December 2023 to 33% this week.

Meanwhile, Hyperliquid has been running its own rewards program and is set to welcome the highly anticipated initial token launch (TGE) of HYPE, laying the foundation for its future decentralization, EVM compatibility, and community governance. (HYPE went live on the morning of November 29, opening at $3.2. The current circulating supply is 333 million tokens, with the first hour's trading volume reaching $157 million. As of this writing, the token price has already exceeded $9.4, a nearly 200% increase, with a market cap of over $3.2 billion.)

Let's explore what sets Hyperliquid apart and the plans following the HYPE launch.

Hyperliquid's unique features go beyond traditional derivatives, offering well-designed token creation tools, liquidity management, and a smooth user experience with profit generation capabilities.

In addition to perpetual contracts, Hyperliquid also offers native token functionality through its HIP-1 token standard. Projects can issue tokens through a simple five-step on-chain process, defining basic information such as token name, setting supply caps, and initial balances.

The most unique feature of HIP-1 is its token ticker Dutch auction system. In this auction, token creators bid for trading codes, with prices starting high and gradually decreasing over 31 hours. This method ensures a fair and transparent bidding and listing environment, maintaining reasonable costs and regulating the pace of new token listings. Hyperliquid allows only about 280 new tokens to be listed each year, prioritizing quality to prevent the market from being flooded with low-quality projects.

HIP-2 (also known as Super Liquidity) ensures that tokens have sufficient liquidity to maintain market stability. HIP-2 achieves this by providing a fully automated on-chain liquidity system for HIP-1 tokens, without the need for third-party market makers.

In practice, HIP-2 automatically places buy and sell orders for each token on Hyperliquid's order book and frequently adjusts these orders to match current market prices. This feature creates a reliable and stable trading environment for token creators and traders.

Inspired by automated market makers (AMMs) like Uniswap, HIP-2 applies AMM principles to the traditional order book model, which is the default mode for centralized exchanges and preferred by many traders for its precise pricing. Essentially, HIP-2 acts as a built-in market-making service, ensuring a stable and convenient trading experience for all tokens issued on the Hyperliquid platform.

Hyperliquid's user experience is designed to be smooth and cost-effective, especially suitable for active traders, with two standout features:

• Fee-Free Trading: Hyperliquid operates on a fee-free trading model, where users do not pay trading fees when placing orders—only minimal fees are required for deposits and withdrawals.

• HyperBFT: The platform uses a custom consensus mechanism called HyperBFT to process a large number of orders with extremely low latency. Most trades are completed within 0.2 seconds, guaranteed to be completed within 0.9 seconds even during busy periods. Additionally, the system can handle up to 100,000 orders per second, with the potential for more in future updates.

By combining free trading with fast and reliable processing capabilities, Hyperliquid offers a responsive and cost-effective trading experience suitable for both ordinary users and high-frequency traders.

Another unique aspect of Hyperliquid is its two types of pools aimed at helping users earn returns by following experienced traders or through platform activities:

• User Pools: Allow users to automatically copy the trades of experienced traders. Users share in the profits and losses of the pool manager by depositing funds into the pool, earning potential returns without active trading. This setup is ideal for users who want to participate in the market but lack advanced trading knowledge, though users must carefully select pools.

• Protocol Pools: Focus on low-risk profit generation. For example, the Super Liquidity Provider Pool earns returns from market-making, processing liquidations, and protocol fees. These pools offer a more stable and predictable income source through Hyperliquid's operational activities, suitable for users interested in low-volatility returns.

Key developments following the HYPE launch include Ethereum compatibility through HyperEVM and community-driven governance:

One of the most anticipated developments after the HYPE launch is HyperEVM, which will introduce Ethereum compatibility to Hyperliquid. Thirty-five teams are already lined up to deploy on HyperEVM. For instance, Felix Protocol will launch a stablecoin called feUSD, while HyperLend will bring lending markets to layer-one chains.

After the HYPE launch, Hyperliquid's journey towards decentralization will officially begin, with token holders playing a crucial role in platform governance and operational security. Through HYPE, token holders will gain voting rights on key decisions, including platform updates, fee structures, and broader policy changes, ensuring that the community has a say in determining Hyperliquid's direction.

In addition to governance, HYPE will also play a role in establishing a distributed validator network to enhance network security. Currently, Hyperliquid is run by four core validators operated by team members. After the token launch, Hyperliquid plans to implement a validator network to decentralize transaction validation and reduce reliance on a single operator. This approach not only enhances network security and transparency but also lays the foundation for a fully decentralized ecosystem, allowing users to actively participate in governance and operational resilience.

Hyperliquid has quickly become a strong player in the trading field in a short period of time, standing out in market competition with its product-first approach, fast and cost-efficient user experience, and focus on organic growth.

Following the HYPE token launch, the ecosystem will move towards decentralization, opening doors for community governance, rapid expansion through Ethereum compatibility via HyperEVM, and a decentralized validator network to enhance security and resilience. Hyperliquid's future looks very promising, and the timing of the HYPE launch is perfect for further expansion.