Foresight Ventures Depth Interpretation of Hyperliquid's Path to Success, Insights into the Next Wave of on-chain Infrastructure Trends

The rise of Hyperliquid is the result of multiple factors including technology, products, marketing, and economic models.

Written by: Maggie @Foresight Ventures

In 2024-2025, Hyperliquid rises at an astonishing speed, becoming a major liquidity hub on the blockchain. Its total open interest exceeds $10.1 billion, with over $3.5 billion in USDC locked. Whales like James Wynn showcase their skills here, leveraging hundreds of millions in positions with 40x leverage, driving market sentiment and harvesting liquidity. Meanwhile, the launch of HyperEVM further expands the ecosystem, attracting multiple innovative projects.

Today, we delve into two key issues:

1. How did Hyperliquid rise?
2. What are the noteworthy ecosystem projects on HyperEVM?

How Hyperliquid Rose to Prominence?

Hyperliquid is a high-performance decentralized exchange (DEX) focused on spot and perpetual contract trading, and has launched HyperEVM, an EVM L2 on Hyperliquid. Most people became aware of Hyperliquid starting from the massive airdrop in November 2024, before which many only considered it an ordinary perp dex. Later, people gradually came to understand what makes Hyperliquid special.

Technology:

• A decentralized trading platform without the need for KYC, but with the experience of a CEX: Hyperliquid does not require users to undergo KYC verification, allowing for anonymous trading, which attracts privacy-conscious traders and institutions sensitive to regulation. Hyperliquid offers a CEX-like user experience (speed, UI/UX) but without identity verification, lowering the entry barrier.

Product:

• Low fees, high leverage: Maker fee 0.01%, taker fee 0.035% (can be as low as 0.019% for large clients). Supports 50x leverage, much higher than most DEXs (such as dYdX's 20x).
• High-yield HLP Vault: HLP offers an annualized return of 14%-24% by participating in market making and liquidation profits through depositing USDC, attracting DeFi users seeking stable returns. HLP's community-oriented design (no team cuts) further enhances user trust.
• Community-oriented and deflationary mechanism: All transaction fees are allocated to the community (HLP and Assistance Fund) rather than the team or insiders, enhancing decentralization. Buybacks and burns effectively reduce circulating supply, supporting long-term value growth.

Marketing:

• High Proportion Airdrop and Wealth Effect: The 31% HYPE airdrop in November 2024 (310 million tokens, worth 1.2 billion USD) is one of the largest airdrops in crypto history. The airdrop is based on user trading volume and referral points, incentivizing early users to participate and enhancing loyalty. The HYPE price skyrocketed from $3.9 to $27 (reaching a high of $34.96), creating a significant wealth effect and attracting more users to join.
• The Whale Effect, Attention Economy: Hyperliquid's opening position information is transparent; however, this transparency coexists with manipulability. On one hand, the public nature of on-chain data exposes the positions of whales, allowing retail investors to track the movements of smart money; on the other hand, whales leverage this transparency to manipulate the market in reverse. For instance, traders like James Wynn use Hyperliquid's high leverage (40-50 times) and transparency to publicly disclose large positions (such as a $568 million BTC long position), attracting follow-on capital and creating a positive feedback loop of "position-emotion-price."

Economic Model:

• Revenue Closed Loop and Deflationary Mechanism: The platform's revenue is returned to token holders or ecosystem participants through buybacks, burns, dividends, etc. This creates a positive cycle of "increased usage → increased revenue → enhanced token value."

Hyperliquid's main source of revenue comes from platform fees and HIP auction fees.

• Platform Fees: Includes fees for spot and perpetual contracts (maker fee 0.01%, taker fee 0.035%, users with high trading volume can get as low as 0.019%), funding rates, and liquidation fees.
• HIP-1 Auction Fee: New tokens listed under the HIP-1 standard are required to pay an auction fee, which goes entirely to the Assistance Fund.

The handling fee is allocated to HLP and the Assistance Fund.

• 46% allocated to HLP depositors as market-making and liquidation profits.
• 54% goes into the Assistance Fund for HYPE buyback and burning.

The dual deflationary mechanism (buyback + burn) enhances the value stability of HYPE.

• The Assistance Fund regularly uses accumulated USDC to repurchase HYPE in the secondary market, creating sustained buying pressure.
• In spot trading, the HYPE portion of the HYPE-USDC trading pair is directly burned, reducing the circulating supply.

Many projects want to emulate this model, but it is not suitable for most projects because they do not meet the prerequisites required for this model. 1. Insufficient income. The vast majority of projects have an annual income of less than 1 million USD, and even if the return ratio reaches 100%, it has a limited impact on the token price. 2. Most projects' tokens lack support from practical use value. 3. No cost structure advantage. HyperLiquid, as a derivatives platform, has marginal costs lower than DeFi projects that require a large amount of liquidity mining subsidies.

Ecology:

• HyperEVM, as the EVM-compatible L2 of Hyperliquid, attracts DeFi projects to migrate, forming a diverse ecosystem of derivatives + lending + memes.

Overall, the rise of Hyperliquid is the result of multiple factors: technology (no KYC, near CEX trading experience) + product (low fees, high leverage, high yield HLP treasury) + marketing (large airdrops, whale effect) + economic model (income closed loop, buyback deflation) + ecosystem (HyperEVM). Its marketing strategy and economic model design are particularly worth learning from. However, two major risks must be taken into account: 1. Regulatory pressure: In an increasingly stringent compliance environment, the no KYC model may face significant challenges. 2. Cycle test: The income structure is sensitive to market activity, and the sustainability of the business model in a bear market still needs to be verified.

Which ecological projects on HyperEVM are worth paying attention to?

As of May 31, 2025, data on DefiLIama shows that the HyperEVM ecosystem's TVL has reached $1.8 billion, covering sectors such as lending, DEX, and Memes.

*(Data from DefiLIama:

1. HyperLend

HyperLend is a lending project on HyperEVM, with a TVL of 370 million USD, making it one of the leading projects on HyperLiquid and one of the three essential components of DeFi. Website:

Currently, a large amount of wstHYPE and WHYPE is being staked on HyperLend to earn interest. However, due to the early stage of the HyperEVM ecosystem, overall borrowing demand is relatively low, resulting in temporarily low lending APR. As more applications are launched, the user base expands, and leverage demand increases, borrowing demand is expected to rise, thereby boosting lending APR.

HyperLend's lending framework features a three-layer lending architecture that is flexible and emphasizes risk isolation. It supports both pool-to-peer and peer-to-peer models. Distribution:

• Core Pool: Shared liquidity for multiple assets, suitable for regular lending scenarios;
• Independent Pool: Contains only two types of assets, achieving risk isolation to prevent cross-asset risk spread;
• Peer-to-Peer Pool: Borrowers and lenders match directly, allowing for customizable interest rates and terms, with rates typically higher.
• Supports flash loans: no collateral, repay within a single block, supports high-frequency arbitrage and liquidation.

After users deposit assets, they will receive yield tokens (hTokens), which represent their principal deposit plus accumulated interest. The accounting positions are tracked through debt tokens (DebtTokens), which accumulate interest over time, ensuring that the process is transparent and traceable.

In addition, HyperLend collaborates with HyperLiquid, allowing users to borrow additional assets using hHLP as collateral and earn interest, thereby enhancing the capital utilization efficiency of HLP and providing users with additional income.

HyperLend has established partnerships with multiple DeFi projects, including RedStone, Pyth Network, ThunderHead, StarGate, and Theo Network, enhancing its interoperability and influence within the Hyperliquid ecosystem.

HyperLend has launched a points reward program where users can earn points by using the protocol, potentially receiving token airdrops in the future.

2. Hypurr Fun

Hypurr Fun is a meme launch platform on HyperEVM that provides a Telegram bot and web interface, making it easy for users to trade quickly. It is currently a major traffic entry point on HyperEVM. Website:

The main features are:

• One-click issuance and trading: Users can easily issue new tokens through the bot and participate in trading.
• Advanced trading tools: support for TWAP (Time Weighted Average Price), automatic sniping, and portfolio management functionalities.
• Buyback Mechanism: All transaction fees will be used to buy back $HFUN tokens, enhancing their market value.
• Community Interaction: Provides social features such as Whale Chats to facilitate communication among users.

$HFUN is the native token of Hypurr Fun, with a maximum supply of 1 million tokens.

3. HyperSwap

HyperSwap is a low-slippage AMM built on HyperEVM.

The main function is:

• Token Trading: Supports the exchange of multiple tokens, providing a fast and low-slippage trading experience.
• Liquidity Provision: Users can create and manage liquidity pools to earn transaction fees and platform rewards.
• Token Issuance: Allows users to issue their own tokens in a permissionless environment.

HyperSwap adopts a dual-token model, consisting of $xSWAP (liquidity mining token) and $SWAP (governance and profit-sharing token). Users earn $xSWAP by providing liquidity and can convert it into $SWAP to participate in platform governance and profit distribution.

In addition, HyperSwap has launched a points program where users can accumulate points through activities such as trading, providing liquidity, and issuing tokens.

Summary

The rise of Hyperliquid is the result of multiple factors including technology, products, marketing, and economic models. Particularly noteworthy are its marketing strategies and the design of its economic model. However, it is necessary to pay attention to the risks of regulatory pressure and cyclical tests. The HyperEVM ecosystem is currently in its early stages and is developing rapidly.