What is Hyperliquid (HYPE) - A Comprehensive Overview

The technology behind Hyperliquid L1

Hyperliquid L1 is an ambitious project built on Tendermint and relies on a custom consensus algorithm, HyperBFT, an EMV-compatible bridge, HyperEVM, and a Proof-of-Stake (PoS) consensus mechanism.

It is specifically designed to leverage these features to provide an efficient operating environment for decentralized finance (DeFi) applications.

Imperator offers advanced Hyperliquid RPC nodes designed to enhance blockchain interaction, providing high-performance, security, and scalability for decentralized finance (DeFi) applications.

Core Features of Hyperliquid

Hyperliquid aims to offer wholesome transparency, low trading and transaction costs, deeper liquidity, and unmatched throughput. It also hopes to introduce a stellar user experience to the DeFi space.

The DEX offers one-click trading, near-instant transactions, and API support for every trader, and stop-loss (SL) and partial take-profit (TP) for advanced traders.

The platform aims to deepen liquidity by connecting interoperable sources in the DeFi realm. Hyperliquid has native vaults that open liquidation strategies and market-making to its community.

Aside from deepening liquidity, the vaults provide an avenue for revenue sharing with the community.

The Core Concepts of Hyperliquid

Blockchain technology presents bold value propositions. The use cases of the tech are revolutionizing various segments of the global economy. One of the most prominent and very successful applications is DeFi.

With every signal pointing to this solution as the most likely direction global finance will take, making it as efficient as possible is only sensible.

Decentralization, Self-Custody and Transparency

Hyperliquid has identified three critical features for DeFi: absolute decentralization, self-custody, and transparency.

The platform presents these features, giving users centralized exchange-level UX minus the risks associated with delegated custody of funds.

While building decent solutions on existing chains is easier, more is needed to scale an order book to meet global trading parameters.

Order books' critical role in trading demands that the infrastructure supporting them has stellar qualities. Hyperliquid L1 is robust enough to support the demands of a global exchange.

Hyperliquid's Efficient Costs

Hyperliquid L1 enables the DEX to run an optimized exchange state machine, not general smart contracts. Thus, it can run efficiently on negligible gas fees (<$0.001 per transaction).

The DEX plans to introduce trading fees later on its roadmap. However, it currently does not charge for trades.

Ultimately, the DEX plans to introduce trading fees rivaling centralized exchange rates and rebates for market makers.

How does Hyperliquid work?

Hyperliquid provides an efficient environment for trading perpetual contracts through trade transparency, scalable infrastructure, and democratized liquidity.

Hyperliquid relies on a high-performance L1 blockchain and HyperBFT consensus to ensure high throughput and low latency. HyperBFT enables real-time trade processing, while the optimized blockchain ensures transparency.

The L1, HyperBFT, and PoS consensus together make Hyperliquid a secure and seamless platform for perpetual contract trading.

HyperEVM

HyperEVM allows users to transfer assets between the Hyperliquid L1 and Ethereum-based networks. This approach is similar to dYdX Chain's use of the Cosmos SDK

The same validator sets operating the Hyperliquid L1 secure the bridge, ensuring that transfers across the various ecosystems are safe. It is designed to facilitate high transaction volumes efficiently and securely.

Hyperliquid Perpetual Order Book

Hyperliquid DEX is the flagship app of the ecosystem, and it differs widely from common DEXs as it does not rely on automated market makers (AMMs).

Instead, it leverages a traditional order book where traders place bids and request assets. The DEX mimics the UX of centralized exchanges. It puts all trading processes on-chain to enhance transparency.

Oracle-Dependent Pricing Tool

The platform uses a decentralized oracles pricing system where validators publish spot prices from major exchanges.

The data determines funding rates and margin levels and triggers liquidation events.

Clearinghouse and Margin Protocol

Hyperliquid DEX incorporates a clearinghouse that can manage users’ margin positions and balances, supporting cross-margin, where traders share collateral across multiple positions, and isolated-margin trading methods, where specific collateral is dedicated to individual positions.

Hyperliquid Vaults

Vaults allow users to fund Hyperliquid trades. The DEX natively integrates vaults, enabling users to deposit into the strategies running therein.

Users who deposit into the vaults copy the vault’s trades by default and earn a share of the profit and loss (PNL).

What makes Hyperliquid useful?

Hyperliquid stands out in the DeFi ecosystem by tackling some of the most pressing challenges faced by decentralized finance today.

By bridging the performance gap between centralized and decentralized exchanges, minimizing transaction costs, and deepening liquidity, Hyperliquid aims to provide a seamless and efficient trading experience.

Here are the key ways in which Hyperliquid proves its value:

• Bridges the performance gap: Hyperliquid offers CEX-level UX and performance, and benefits of DEX.

• Minimize transaction costs: Its optimized exchange state machine, efficient order matching, and unique approach to transaction and trading charges have significantly reduced gas costs and trading fees for end users.

• Deepens liquidity: Reducing spread across numerous interoperable smaller exchanges while concentrating liquidity allows the platform to offer deeper trading volumes.

• Broadens trading options: DeFi participants get access to an expansive range of trading strategies because Hyperliquid DEX brings together perpetual futures trading, advanced order types, and up to fifty times leverage.

HYPE Token

What is the HYPE Token?

HYPE is the native token of the Hyperliquid ecosystem. It is not in circulation as of press time. However, the Hyper Foundation held a successful launch event and plans a genesis distribution in Q4/2024.

Token holders will participate in the governance process of the Hyperliquid platform and contribute to liquidity and market making. Besides, HYPE will be used to incentivize the community to provide liquidity.