What is Hyperliquid (hype) and how does it work?

What is hyper liquid? layer 1 A blockchain tailored specifically for financial operations, integrating transaction liquidity, user-facing applications, and token issuance on a single platform. The core of this project aims to create an open system where all aspects of finance are handled directly on-chain and where participants can interact without intermediaries. This setup allows developers and users to build and trade in a unified environment and has attracted attention from both individual traders and large organizations.

The blockchain has gradually released mainnet features, including HyperEVM, in early 2025, but has maintained consistent performance even during periods of high market activity. The project’s native token, HYPE, plays a central role in facilitating transactions and governance, connecting the ecosystem in a way that rewards active participation.

Founded with a focus on performance and decentralization, Hyperliquid differentiates itself through custom-built components that address common bottlenecks in blockchain-based finance. For example, its consensus mechanism ensures quick finalization of trades. This is important for high frequency activities such as perpetual futures trading. As the platform evolved, community feedback was incorporated and features such as permissionless asset deployment and special contract types were created. This approach has fostered ecosystem growth through the integration of: metamask You will now have easy access to permanent transactions directly from your mobile wallet. Overall, Hyperliquid provides tools that make complex financial operations more accessible.

Technology overview

Hyperliquid’s architecture revolves around a custom consensus algorithm known as HyperBFT, taking inspiration from protocols such as Hotstuff and incorporating optimizations tailored to the demands of financial blockchains. HyperBFT provides 1 block finality. This means that transactions are quickly and irreversibly confirmed, a feature that supports the platform’s emphasis on real-time trading. This consensus layer underpins the entire system and handles everything from network communication to state execution without the latency issues that plague other blockchains. During the market volatility on October 10th, for example, Hyperliquid processed It can record large amounts of data without downtime, and its design has proven robust.

Hyperliquid stack (Hyperliquid documentation)

State execution in Hyperliquid is divided into two main parts: HyperCore and HyperEVM. HyperCore manages native trading functionality such as perpetual futures and spot order books, all transparently executed on-chain. We currently support up to 200,000 orders per second, with throughput continually improving as the node software receives updates. To complement this, HyperEVM brings Ethereum-compatible smart contract capabilities to the chain, allowing developers to deploy general-purpose applications that seamlessly interact with HyperCore liquidity.

HyperEVM operates based on the Cancun hard fork specification and includes: EIP-1559 We use HYPE as a gas token for dynamic price adjustments. Charges containing both base and priority components are burned to maintain economic balance, with base charges reducing the total supply and priority charges being sent to null addresses. This integration means smart contracts can read Hyperliquid’s layer 1 state through precompilation and perform actions through CoreWriter contracts, opening the door to innovative financial primitives such as lending protocols and tokenized vaults.

Developers access HyperEVM via the JSON-RPC endpoint by setting the chain ID to 999 for mainnet and 998 for testnet. Although there is no official frontend yet, users can connect directly to their wallets or build custom interfaces, making it easy to port existing Ethereum tools. The lack of blobs in the hard fork keeps it lightweight, prioritizing speed over additional data storage features. Combining these elements creates a blockchain that not only processes large volumes of transactions, but also supports a wide range of decentralized applications, all secured by the same consensus protocol.

Hypercore details

HyperCore forms the backbone of Hyperliquid’s trading capabilities, embedding a fully on-chain perpetual futures and spot order book directly into the blockchain’s execution layer. All actions, such as placing and canceling orders, executing trades, and processing liquidations, occur with the same one-block finality provided by HyperBFT. This transparency allows all participants to see activity in real time, reducing the need for trust in a centralized operator. In terms of performance, HyperCore optimizations enable significant throughput and continue to scale as the underlying software improves.

One of HyperCore’s notable features is its support for hyperps, a type of perpetual contract unique to Hyperliquid. Hyperps works similarly to traditional Perps, but eliminates dependence on external spot or index oracles. Instead, an 8-hour exponentially weighted moving average of the contract’s own mark price is used to determine the funding rate. This mechanism improves stability and prevents manipulation of assets, especially during the pre-launch stage.

For example, if momentum pushes the price sharply in one direction, the funding rate will adjust over the next 8 hours to encourage opposing positions. Mark prices incorporate weighted median prices from pre-launch purps on centralized exchanges for added reliability and are capped to prevent extreme deviations. The mark price cannot exceed 10 times the 8-hour EMA and the oracle price is limited to 4 times the monthly average. Once the underlying asset is listed on a major spot market such as Binance or OKX, the hyperp will automatically convert to a standard perp, increasing leverage options from the initial 3x limit. Traders should be aware of the specific margin requirements and potential for high volatility in these contracts.

HyperCore’s design also facilitates seamless integration with HyperEVM, allowing smart contracts to leverage their fluidity for more complex applications. This synergy positions HyperCore as the foundational layer for building efficient financial tools, delivering a blend of speed and security to handle demanding workloads.

HYPE Token: Tokenomics and Utility

hype It serves as the native token of the Hyperliquid ecosystem, powering transactions, governance, and network security. The maximum supply is limited to 1 billion tokens, and its distribution emphasizes long-term participation and community involvement. Approximately 38.888% of the supply will be allocated to future emissions and rewards to contributors, and 31% will be devoted to origins. air drop For early supporters.

The additions support team efforts, advisors, and ecosystem development, while recent proposals consider reducing overall supply to increase stability and remove hard caps. The number of tokens in circulation at this time is approximately 336 million, reflecting a careful release schedule to avoid sudden floods.

From a utility perspective, HYPE primarily serves as a gas token for both HyperCore and HyperEVM operations. Users pay gas fees in HYPE for deployments such as spot asset launches. These fees contribute to a buyback mechanism that buys back tokens with protocol revenues, potentially supporting long-term value.

Beyond fees, HYPE also enables validator staking, allowing owners to participate in securing the network and earn rewards. The governance aspect allows token holders to vote on proposals including protocol upgrades and parameter changes, facilitating a decentralized decision-making process. For example, running a validator node requires at least 10,000 HYPE, combined with scrutiny to help maintain network integrity. This multifaceted role makes HYPE integral to day-to-day operations, from simple transactions to executing complex smart contracts, while encouraging holders to actively engage with the platform.

superfluid storage

Hyperliquid’s Vaults provides a way for users to pool funds and follow streamlined automated trading strategies built directly into HyperCore. Essentially, a vault acts as a shared wallet managed by a leader (either an individual trader or an automated system) that executes transactions on behalf of depositors. This setup allows participants to benefit from professional strategies without having to manage positions themselves, democratizing access to advanced tactics such as market making and funds rate arbitrage.

There are different types, including protocol vaults like Ultra Liquidity Providers (HLPs) that handle market making and clearing while earning a cut of trading fees. Users deposit stable assets and other tokens into a vault, and leaders deploy them permanently or spot. Profits are typically distributed proportionately, excluding fees that include a reduction in the leader’s performance. Creating a vault involves setting parameters through the platform’s interface, and depositors can withdraw at any time depending on their ongoing positions. Benefits include passive exposure to sophisticated trades, but risks arise from leader performance, market volatility, and potential liquidations. An analysis of the top safes shows a diverse user base, with some attracting large institutional deposits and others attracting smaller individual deposits, highlighting the flexibility of the system. Vault leverages HyperCore features such as fast order execution to execute strategies that mirror those of the main DEX.

How listings work on Hyperliquid

Hyperliquid’s listing operates in a permissionless manner, removing barriers such as fees and approval processes found on centralized exchanges. Anyone can deploy spot assets by paying a gas fee on HYPE, making the process accessible and transparent. Adopters can choose to receive up to 50% of the transaction fees generated from pairs, incentivizing quality additions while keeping everything verifiable on-chain.

For new tokens, the HIP-1 standard facilitates launch through Dutch auctions, with initial liquidity set through community bidding. Additional pairs between existing assets can also be deployed through separate auctions, independent of token launch. Stable assets can qualify as quoted currencies if they meet on-chain criteria, as seen with USDH becoming the first permissionless quoted asset. Perp listings are often created by community requests, and Hyperp acts as a bridge for unactivated tokens until a spot becomes available. This entire lifecycle (build, launch, trade) happens entirely on Hyperliquid, allowing projects to move from idea to market without gatekeepers.

Ecosystem development and future prospects

Hyperliquid’s ecosystem continues to grow through community-driven initiatives and partnerships. Recent additions include hyperbarps for assets such as Monad and Meteora, which respond directly to user input. The platform also distributed NFTs such as the Hypurr collection, with 4,600 unique pieces deployed on HyperEVM as a tribute to the support of early contributors. Events such as Fireside Chats at Token2049 highlight topics such as ecosystem growth and stablecoins and draw engaged audiences.

Hyperliquid’s commitment to performance and openness positions it well for broader adoption. Integration and continuous optimization with tools like MetaMask ensure that MetaMask remains a viable option for traders and builders.

source:

• _{Hyperliquid documentation: https://hyperliquid.gitbook.io/hyperliquid-docs}
• _{EIP-1559 Overview (Binance Academy): https://www.binance.com/en/academy/glossary/eip-1559}