Hyperliquid Revolutionizes DeFi with Composable Liquidity

The concept of liquidity begetting liquidity holds true, and Hyperliquid has become the go-to decentralized exchange for traders seeking perpetual futures or 'perps'. Founded by Harvard classmates Jeff Yan and iliensinc, Hyperliquid has been live since 2023, leveraging its order book volume and depth to offer firms a unique composability feature. This concept, inspired by decentralized finance (DeFi), allows permissionless smart contracts to seamlessly integrate, much like money LEGO blocks, to create novel tokenized financial products. Hyperliquid's Ethereum-compatible HyperEVM is directly connected to its high-performance HyperCore blockchain, enabling other applications to tap into the platform's shared liquidity without fragmentation. This means that applications like wallets or exchanges can utilize Hyperliquid as a backend, offering perps trading and other services without having to develop their own infrastructure. As more developers integrate with Hyperliquid, the platform's liquidity deepens, and the variety of assets expands, resulting in a compounding network effect. Currently, hundreds of developers, including prominent names like MetaMask, Phantom wallet, and VALR, are utilizing Hyperliquid's 'builder codes', generating approximately $90 million in revenue. The platform has garnered significant praise from its users and partners. Hyunsu Jung, CEO of Hyperion DeFi, describes Hyperliquid as 'the AWS for finance', highlighting its layer-one blockchain infrastructure and liquidity provision. Jung notes that, similar to AWS, builders own their users and control the user interface, while Hyperliquid provides the underlying liquidity and execution. The 'builder codes' feature allows integrators to focus on delivering a seamless user experience, while Hyperliquid handles the backend liquidity and execution. This enables integrators to charge fees on the notional size of their users' trades without having to develop or maintain their own infrastructure. For example, MetaMask, a popular Ethereum-based wallet, has integrated with Hyperliquid's EVM module, providing its users with self-custodial access to perps directly from the wallet. This integration allows MetaMask to offer its users best-in-class on-chain liquidity and institutional-grade infrastructure, while earning fees on every trade. Similarly, South Africa-based exchange VALR has partnered with Hyperliquid, leveraging its perps order book to offer its customers enhanced liquidity and execution. According to VALR's CEO, Farzam Ehsani, the exchange had struggled to gain traction with its own perpetual futures product due to liquidity and volume constraints. By integrating with Hyperliquid, VALR can now offer its customers a more robust and liquid trading experience. 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 discrepancies between different venues, creating new revenue streams and deepening liquidity.