This is a published version of our weekly Forbes Crypto Confidential newsletter. Sign up here to get it days earlier free in your inbox.
Hi all,
Last week, I wrote about perpetual futures (perps), the no-expiry, 24/7, leverage-heavy derivatives that dominate crypto markets. This week, let’s talk about where most of that trading actually happens: Hyperliquid, the decentralized exchange built on its own blockchain that just in two years has become the place to trade perps.
Hyperliquid now commands 70–80% of the market for perpetual futures. It’s been beating Robinhood in trading activity for three months straight—$300 billion in July vs. Robinhood’s $237.8 billion. In August, Hyperliquid clocked in over $100 million in revenue. That puts its annualized run rate at roughly $1.4 billion, according to crypto analytics firm Artemis. And that’s with a team of just 11 people. By revenue per employee (do the math), it may be the most successful company on the planet. Meanwhile, the market cap of Hyperliquid’s native token, HYPE, is approaching $12 billion.
None of this is surprising when you consider just how big perps are. They’re tailor-made for the chronically online crypto speculators: simpler than options, always available, and loaded with leverage to amplify returns (or losses). Many consider perps crypto’s greatest invention, and for the exchanges that offer them, they’re an absolute cash machine. “The mindset of a lot of people trading perps is ‘I’m willing to roll the dice 100 times and lose everything 99 of them for the one chance that my bet is going to return 10,000x,’” says Tyler Tarsi, CTO of blockchain developer Omni Labs.
Most perp platforms, including Hyperliquid, are only accessible offshore and do not require users to meet KYC (know-your-customer) requirements that are tightly enforced in the U.S., giving them a global user base and fewer compliance bottlenecks.
All that helps, but Hyperliquid’s success is also a function of execution. Founder Jeff Yan, a former algorithm developer at Hudson River Trading, and his lean team managed to build a low-cost decentralized trading venue that matches centralized exchanges in both speed and precision—a rarity, according to Artemis’ Zheng Jie Lim—and he did it without raising outside funding.
Another reason Hyperliquid went viral boils down to “it made a lot of people a lot of money,” says Tarsi. In late 2024, the team sent, or “airdropped”, over $7.5 billion worth of HYPE tokens (roughly one third of the total supply) into the wallets of some 94,000 early users. Airdrops weren’t new, but Hyperliquid’s was perfectly timed and insanely generous.
More importantly, the incentives haven’t stopped. Hyperliquid now directs 99% of the fees it collects into buybacks of HYPE. It’s rare to see tokenomics this community-oriented, Lim says. And it creates a sticky flywheel: users get an airdrop, start trading, generate fees, which fund buybacks, which push the token higher, which gets more people trading.
Hyperliquid is now clawing its way into spot markets, too. Last Monday, it hit $3.4 billion in daily spot volume, with $1.5 billion just from bitcoin, making it the second-largest trading venue for the asset globally. A growing patchwork of native stablecoins is emerging on the platform, says Artemis’ Lim, and the upcoming HIP-3 upgrade could let users trade perps on just about anything—not only crypto. Think gold, S&P 500, Palantir stock.
Naturally, the arms race is on. Coinbase entered the fray in July with CFTC-regulated perpetuals on bitcoin and ether, finally offering U.S. traders a compliant way to access leveraged crypto bets. Robinhood rolled out its own perp offering in the EU a month earlier and is probably looking for a way to bring it stateside. Though Coinbase caps leverage at 10x and Robinhood limits it to just 3x, well below the 40x available on Hyperliquid, their massive user bases, trusted brands, and full-service product suites make them as serious competition as it gets.
Smaller challengers are also flooding the market. “There are a lot of perp exchanges trying to be the next Hyperliquid, running the same playbook, and we’ve seen the life cycle of perps exchanges now several times with FTX, dYdX…The exchange gets huge. Everyone trades. They launch a token. The token stops performing well. Then a new winner comes in,” says Tarsi. “If we’re going to follow the trends of the past, that could happen again. Traders are mercenaries after all.”