Everyone can open a Perptual Futures market, Hyperliquid HIP-3 Core Ten Questions and Answers

Author: KarenZ, Foresight News

Imagine this: Hyperliquid invites you, "Hey, as long as you have enough strength, you can build your own Perp DEX!"

HIP-3 is just such a feature. On October 13th, Hyperliquid officially activated HIP-3 on the mainnet, allowing any qualified developer to independently deploy and operate perpetual contract markets. This marks a key step for Hyperliquid towards a fully decentralized contract listing process.

In simple terms, Hyperliquid's HIP-3 is a set of rules that allows you to "become the boss and independently open a perpetual contract market."

Core Gameplay: How to Open a Perpetual Contract Market?

What are the entry requirements?

Hyperliquid has set a relatively high staking threshold:

• Must stake 500,000 HYPE (currently worth over 20 million USD): However, it is expected that the staking requirements will decrease as the infrastructure matures.
• Completely Permissionless: No application needed, no approval required, just stake and deploy.
• Oracle selection, contract design, etc. to be solved independently.

Basic Gameplay

• One pledge corresponds to one DEX: Under the current rules, one pledge corresponds to one Perp DEX, and in the future, it may allow one pledge to open multiple DEX.
• High-performance order book: HyperCore will provide you with a separate margin system and on-chain order book.
• Token contracts must participate in auctions to go live: Want to launch a token contract? You need to participate in a Dutch auction and pay Gas fees with HYPE tokens. Auctions are held every 31 hours. The first 3 assets in each market do not need to participate in the auction and can go live directly; starting from the 4th, you will need to participate in the Dutch auction with others, following the same rules as the previous HIP-1 (spot listing) auction. The reason for this design is to allow new DEX operators to quickly launch, while charging from the 4th to ensure that only valuable tokens are listed. All HIP-3 DEX share a common auction pool.
• How are deployment fees charged?: Deployers can set a maximum fee sharing of 50%, and can even add additional fees on top of the base rate.
• What can be used as collateral? In theory, any "quote asset" (the pricing asset of a trading pair) can be used as collateral.
• Margin Mode: Currently, trading can only use "Isolated Margin" (where one asset's loss does not affect other assets), while "Cross Margin" (where all assets share the margin) will be gradually added later.

As the market 'boss', what else do you need to do?

As the deployer, you are the "boss" of this market and need to be responsible for:

• Define market rules: for example, what oracle to use, how to design the contract.
• Daily Operations: Set oracle prices, control leverage multiples, and settle the market when necessary.
• A multi-signature mechanism can also be used for management, making operations more standardized.

How is the ### fee calculated?

• Users Pay Double: Trading on the HIP-3 Perp DEX incurs fees that are twice that of the validator-operated perpetual contract market.
• Deployers take 50%: Your fee sharing is fixed at 50%, with additional charges possible.
• Protocol Revenue Remains Unchanged: The money earned by the Hyperliquid protocol is the same as that of the official market (because the extra half is given to the HIP-3 Perp DEX deployer).
• Discount Mechanism Continues: The HIP-3 market continues to integrate mechanisms such as staking discounts and referral rewards.

In simple terms: Users pay double, and the HIP-3 Perp DEX deployer and the protocol each take half.

How to control risks?

• Malicious actions will be penalized: The 500,000 HYPE staking requirement acts as a margin. In the event of malicious market manipulation, validators have the right to reduce the deployer's stake through weighted voting based on the stake.
• If malicious operations are detected, penalties cannot be avoided even if the unstaking is initiated: Even if you start to unstake, issues discovered within 7 days will still incur penalties.
• 30 Days Lock After Stopping Operations: Even if you close all markets, the staking must still be locked for an additional 30 days.
• Position Limits: To control risk, the system has set up two levels of constraints on open contracts: nominal limit and scale limit. The nominal limit is the total of all assets in the DEX calculated as "position quantity × current price", which governs both the total position of the entire market and the position of individual assets. The scale limit is simpler, as it is calculated based on position quantity, and is enforced for each asset. Currently, each asset can hold a maximum of 1 billion units. Therefore, you need to set a reasonable "minimum trading unit."

What actions will be penalized?

• Malicious input of abnormal data attempted to attack the system (even if it was unsuccessful).
• Bypassing system restrictions by exploiting vulnerabilities or boundary conditions.
• Invalid input that causes network crashes or performance issues.

However, bugs caused by normal input (protocol issues) and system failures unrelated to the deployer's actions will not result in forfeiture.

How much is the fine?

Validators will vote to decide, generally referring to this standard:

• Causes the system to crash for a long time or transition to an invalid state: up to 100% penalty.
• Causes temporary system downtime: up to 50% penalty.
• Invalid inputs that cause network performance degradation or performance issues: up to 20% penalty.

The staked amount penalized for the deployer will be destroyed, rather than allocated to the affected users.

What changes will HIP-3 bring to the market and players?

The launch of HIP-3 can be said to be an important turning point in the development of the Hyperliquid ecosystem, opening up the power of listing coins to everyone. This is a huge leap from centralized governance to decentralized governance. The Hyperliquid team may be conservative and only list mainstream coins. However, the community's imagination is limitless, for example,

• Keep up with market trends: When a new public chain token suddenly becomes popular, the creator can quickly launch its perpetual contract to seize the market enthusiasm. This "small and fast" market model can fill the gaps left by large platforms, providing users with more trading options.
• Long-tail assets: niche but in-demand tokens can also have perpetual contracts.
• Innovative products: For example, creating a perpetual DEX focused on AI concept coins, RWA special sessions, and Meme coin special sessions.

Moreover, after the deployer stakes 500,000 HYPE, their interests are bound to the Hyperliquid ecosystem, and subsequent auction fees will also rely on HYPE. They will actively promote their own DEX, bringing in their own community and users, and hold HYPE for the long term, forming a moat for the Hyperliquid ecosystem.

More importantly, HIP-3 will create value for the HYPE token, with each DEX needing to lock 500,000 HYPE. Locking = reduction in circulation = price support.

What are the potential negative impacts of HIP-3?

Although HIP-3 brings many innovations to the Hyperliquid ecosystem, there are still some potential risks from the perspective of actual operation and user experience that need to be objectively examined.

First of all, 500,000 HYPE shuts many people out; a threshold worth over 20 million USD is astronomical for individual developers, and only institutions, large holders, and VCs can afford it. This may ultimately lead to market creators being concentrated in the hands of a few financially strong institutions or large holders, deviating from the original intention of "decentralized co-construction." However, this can also mitigate many risks.

Secondly, HIP-3 assigns market definition and operational responsibility to the creators. If the creators make poor choices regarding the oracle, design flawed contract rules, or make operational mistakes during execution, it may lead to user asset damage.

At the same time, with the emergence of numerous markets operated by different creators, users need to invest a lot of effort to distinguish the quality of the markets, which significantly increases the cost of selection. If they accidentally enter an "unreliable" market, they will face higher trading risks.

In addition, although the first three assets do not require an auction to go live, starting from the fourth asset, participation in a shared Dutch auction is required. If multiple creators compete for the qualification to launch popular assets at the same time, it may lead to inflated auction prices. Smaller creators, with limited financial strength, may find it difficult to compete for high-quality asset launch spots and can only opt for less popular assets, further restricting their market development space.

What is even more noteworthy is that each DEX operated by creators is independent, with order books and margin systems not interconnected. This can lead to liquidity within the Hyperliquid ecosystem being dispersed across multiple small markets, with insufficient depth in individual markets, resulting in higher slippage and slower transaction speeds, which negatively affects the user trading experience. This is especially true for markets of small and medium creators, where insufficient liquidity may become a fatal bottleneck for their development, creating a vicious cycle of "the less liquidity, the fewer users; the fewer users, the less liquidity."

finally

In one sentence: HIP-3 transformed Hyperliquid from a simple exchange into an exchange platform.

It is like this:

• In the past, Amazon primarily focused on self-operated sales.
• Now, Amazon allows everyone to open a store.

In short: if you have 500,000 HYPE, possess technical skills, and intend to showcase your abilities in the Perp DEX field, then HIP-3 is your stage. But remember, with great power comes great responsibility, so do not mess it up!