Hyperliquid Revolutionizes DeFi with Composable Liquidity

The concept of liquidity begetting liquidity has been a driving force in the financial world. Hyperliquid, a decentralized exchange, has become a top choice for traders, particularly those interested in perpetual futures or 'perps.' Founded by Harvard classmates Jeff Yan and iliensinc, Hyperliquid has been live since 2023, capitalizing on its order book volume and depth by offering firms a unique composability feature. This DeFi concept allows permissionless smart contracts to interlock like building blocks, creating new tokenized financial products. Hyperliquid's Ethereum-compatible HyperEVM connects directly to its high-speed HyperCore blockchain, enabling other applications to tap into the platform's shared liquidity. As a result, applications like wallets and exchanges can leverage Hyperliquid as a backend, offering perps trading and other services without fragmenting liquidity. With hundreds of developers, including big names like MetaMask and Phantom wallet, utilizing Hyperliquid's system, liquidity has deepened, and assets have expanded. The platform has generated $90 million in revenue, according to Flowscan. Hyunsu Jung, CEO of Hyperion DeFi, praises Hyperliquid, stating it's 'not just a perpetuals exchange, but more like the AWS for finance.' Hyperliquid provides the underlying liquidity and execution, while builders own their users and control the interface. The 'builder codes' allow integrators to focus on delivering a great user experience, charging fees on trades without developing the backend or maintaining liquidity. Sterling Barnett, business development lead at Hyperliquid Labs, notes that 'integrators can offer their users best-in-class onchain liquidity and institutional-grade infrastructure, and earn fees on every trade.' For apps like MetaMask, integrating with Hyperliquid's EVM module makes sense, as it provides self-custodial access to perps directly from the wallet. Matthieu Saint Olive, Staff Product Manager at MetaMask, highlights the advantage of being a wallet, with streamlined fund transfers and no need to connect to a dApp. Hyperliquid handles matching, oracle, and margin engine, while MetaMask focuses on the user experience. Saint Olive notes that 'matching orders is genuinely hard, and Hyperliquid is excellent at it.' By routing orders straight to the Hyperliquid order book, MetaMask Perps offers top-notch liquidity and execution quality. MetaMask is seeing growth beyond crypto, with real-world-asset markets increasing from a small slice to roughly a quarter of perp volume. The company charges a flat 0.1% builder fee, with no hidden spread or execution costs. Transparency is key, and MetaMask is exploring innovative pricing models. Even large centralized exchanges, like South Africa-based VALR, are handing over liquidity requirements to Hyperliquid's perps order book. Despite building in-house infrastructure, including risk and liquidation engines, VALR struggled to gain volume and liquidity. By plugging into Hyperliquid, the exchange can tap into a huge amount of volume and market participants from around the world. Looking ahead, when major players like Robinhood and Coinbase offer perps, there will be opportunities for cross-venue arbitrage, according to Jung. This will enable more organic mechanisms for funding rates, driven by non-toxic flow from retail users.