Hyperliquid Revolutionizes DeFi with Deep Liquidity and Composability

The concept that liquidity breeds liquidity is particularly relevant for Hyperliquid, a decentralized exchange that has gained popularity among traders, especially those interested in perpetual futures or 'perps'. Founded by Harvard alumni Jeff Yan and the pseudonymous developer iliensinc, Hyperliquid has been live since the beginning of 2023. The platform is capitalizing on the volume and depth of its order book by providing firms with the ability to compose with its shared liquidity, much like permissionless smart contracts in decentralized finance (DeFi) that can be combined like building blocks to create new financial products. Hyperliquid's Ethereum-compatible HyperEVM is directly connected to its high-performance HyperCore blockchain, allowing other applications to utilize the platform's shared liquidity without fragmenting it. This means that applications such as wallets or other exchanges can leverage Hyperliquid as a backend to offer perps trading and other services, enhancing liquidity and expanding the variety of assets available. As more developers integrate with Hyperliquid, the platform's network effects are amplified. Currently, hundreds of developers, including notable names like MetaMask, Phantom wallet, and the South African exchange VALR, are utilizing Hyperliquid's system of 'builder codes', generating approximately $90 million in revenue according to Flowscan. Hyperion DeFi CEO Hyunsu Jung praises the platform, stating, 'Hyperliquid is not just a perpetuals exchange; it's more like the AWS for finance.' He emphasizes that the platform provides liquidity and allows builders to control the user interface while Hyperliquid handles the underlying liquidity and execution. The 'builder codes' enable integrators to focus on delivering a great user experience while Hyperliquid serves as the backend for liquidity and execution. This allows integrators to charge fees on the notional size of their users' trades without needing to develop the backend or maintain liquidity. For example, MetaMask, an Ethereum-based wallet with over 100 million users worldwide, has integrated with Hyperliquid's EVM module, providing users with self-custodial access to perps directly from the wallet. MetaMask Staff Product Manager Matthieu Saint Olive notes that this integration streamlines fund transfers and allows users to trade directly with the tokens they already hold. When it comes to fees, MetaMask charges a flat 0.1% builder fee with no hidden spread, emphasizing transparency. The platform is also exploring innovative pricing models to make its economics a key advantage. Even large centralized exchanges like VALR are leveraging Hyperliquid's perps order book for liquidity. VALR CEO Farzam Ehsani notes that despite building their own infrastructure, they struggled to achieve sufficient volume and liquidity for perpetual futures. By integrating with Hyperliquid, they can now tap into a vast pool of market participants from around the world. Looking ahead, as major players like Robinhood, Coinbase, and Intercontinental Exchange expand their offerings to include perps, opportunities for cross-venue arbitrage will emerge, according to Jung. This will enable users to maintain positions on multiple platforms, creating organic mechanisms for funding rates.