Hyperliquid Revolutionizes Crypto Perpetuals in DeFi with Shared Liquidity

The concept of liquidity driving further liquidity is a fundamental principle in finance. Hyperliquid, a decentralized exchange, has become a top choice for traders, particularly those interested in perpetual futures or 'perps,' which are blockchain-based derivatives contracts that enable users to speculate on asset prices with leverage and no expiration date. Founded by Harvard classmates Jeff Yan and a pseudonymous developer known as iliensinc, Hyperliquid launched in 2023 and has since capitalized on its order book volume and depth by providing firms with a shared liquidity pool, similar to the concept of composability in DeFi. This allows permissionless smart contracts to interlock, creating new tokenized financial products. Hyperliquid's Ethereum-compatible HyperEVM connects directly to its high-speed HyperCore blockchain, enabling other applications to utilize the platform's shared liquidity rather than fragmenting it. As a result, applications like wallets or exchanges can leverage Hyperliquid as a backend to offer perps trading and other services, leading to increased liquidity, a broader range of assets, and network effects. Hundreds of developers, including prominent names like MetaMask, Phantom wallet, and VALR, have integrated Hyperliquid's 'builder codes,' generating approximately $90 million in revenue. The platform has garnered significant praise from its users, with Hyunsu Jung, CEO of Hyperion DeFi, describing Hyperliquid as 'the AWS for finance.' Jung emphasizes that Hyperliquid provides a layer-one blockchain infrastructure, offering liquidity and execution, while builders own their users and control the user interface. The 'builder codes' enable integrators to focus on delivering a great user experience, while Hyperliquid handles the underlying liquidity and execution. This approach allows integrators to charge fees on the notional size of their users' trades without developing the backend or maintaining liquidity. For example, MetaMask, a popular Ethereum-based wallet with over 100 million users worldwide, has integrated Hyperliquid's EVM module, providing its users with self-custodial access to perps directly from the wallet. This integration enables streamlined fund transfers, allowing users to trade directly with the tokens they already hold. Hyperliquid handles matching, the oracle, and the margin engine, while MetaMask focuses on delivering a great user experience. The partnership has resulted in significant growth, with MetaMask seeing an increase in trading volume beyond crypto, including commodities and equities. In terms of fees, MetaMask charges a flat 0.1% builder fee, with no hidden spread or execution costs, providing transparency and verifiability for traders. The exchange's approach to fees is designed to be a competitive advantage, with plans to explore innovative pricing models in the future. Another notable example is VALR, a large centralized exchange in Africa, which has chosen to utilize Hyperliquid's perps order book for its liquidity requirements. Despite initially building its own infrastructure for perpetual futures, VALR found it challenging to achieve sufficient volume and liquidity. By integrating with Hyperliquid, VALR has been able to tap into a global pool of market participants, increasing its liquidity and trading volume. Looking ahead, the growth of perps trading is expected to create opportunities for cross-venue arbitrage, according to Jung. As more prominent exchanges, such as Robinhood and Coinbase, enter the perps market, traders will be able to take advantage of price differences between venues, creating new opportunities for profit.