Hyperliquid Revolutionizes Crypto Perpetuals in DeFi with Shared Liquidity

The notion that liquidity attracts liquidity is being put to the test by Hyperliquid, a decentralized exchange that has become a top choice for traders of perpetual futures, also known as perps. Founded by Harvard classmates Jeff Yan and iliensinc, Hyperliquid launched in 2023 and has since capitalized on its robust order book by providing firms with the option to compose with its shared liquidity. This approach, inspired by DeFi's concept of composability, enables permissionless smart contracts to interlock like building blocks, giving rise to new tokenized financial products. Hyperliquid's Ethereum-compatible HyperEVM is directly connected to its high-speed HyperCore blockchain, allowing other applications to leverage the platform's shared liquidity without fragmenting it. As a result, applications such as wallets and exchanges can utilize Hyperliquid as a backend to offer perps trading and other services, leading to deeper liquidity, expanded asset variety, and compounded network effects. With hundreds of developers, including prominent names like MetaMask and VALR, utilizing Hyperliquid's system, the platform has generated $90 million in revenue. The growing adoption of Hyperliquid has led to widespread praise, with Hansu Jian, CEO of Hyperion DeFi, describing it as the 'AWS for finance.' Hyperliquid provides the underlying liquidity and execution, while builders own their users and control the user interface, similar to AWS for cloud infrastructure. The 'builder codes' offered by Hyperliquid enable integrators to focus on delivering a great user experience, while the platform handles the backend and liquidity. This approach has been successfully adopted by apps like MetaMask, which has integrated Hyperliquid's EVM module to offer self-custodial access to perps. The partnership has streamlined fund transfers, allowing users to trade directly with the tokens they already hold. Matthieu Saint Olive, Staff Product Manager at MetaMask, noted that Hyperliquid excels at matching orders, which is a challenging task. By routing orders directly to the Hyperliquid order book, MetaMask Perps offers some of the best liquidity and execution quality available. The growth of Hyperliquid has also led to the exploration of new markets, such as commodities and equities, with real-world-asset markets now accounting for a significant portion of perp volume. In terms of fees, MetaMask charges a flat 0.1% builder fee, with no hidden spread or execution costs. The transparency of the fee structure is seen as a major advantage, with the company actively exploring innovative pricing models. The adoption of Hyperliquid by large centralized exchanges, such as VALR, has also been notable. Despite initially building its own infrastructure, including risk and liquidation engines, VALR found it challenging to achieve sufficient volume and liquidity for its perpetual futures. By partnering with Hyperliquid, VALR has been able to tap into the platform's vast volume and market participants, providing its customers with better liquidity and execution. Looking ahead, the opportunities for cross-venue arbitrage are expected to increase as more prominent players, such as Robinhood and Coinbase, enter the perps market. According to Jian, this will lead to more organic mechanisms for funding rates, as retail users enter and exit the market, creating non-toxic flow.