Decrypt’s 2025 Project of the Year: Hyperliquid – Decrypt

Jeff Yan had just watched Sam Bankman-Fried’s crypto empire collapse in a matter of days in 2022. And it was then, amid the chaos of the collapsing FTX and the contagion it caused, that Yan decided to go all in on building his own cryptocurrency exchange—a decentralized alternative he called Hyperliquid.

Now, three years later, Yan appears to have been vindicated. After co-founding Hyperliquid Labs in 2023, Yan has helped develop one of the most impactful decentralized exchanges and layer-1 networks in crypto’s 16-year history—all without venture capital funding.

This year, Hyperliquid has generated over $2.73 trillion in perpetual futures trading volume, $110.65 billion in spot trading volume, and earned $1.22 billion in annualized revenue, according to DefiLlama. To put this into perspective, the American audio company Dolby, known for its tech in cinema and high-end stereo systems, has earned $1.35 billion in revenue this year, according to the company’s own figures, and employs over 2,000 people. Hyperliquid Labs is just an 11-person team, and Hyperliquid’s users share in the company’s revenue.

But beyond the numbers, Hyperliquid’s impact on the industry can also be measured by how it has helped popularize perpetual futures, otherwise known as perps, among crypto-native traders. Perps allow traders to speculate on assets using derivative contracts that never expire, and while using borrowed capital with varying amounts of leverage. The advanced trading tool had previously been much less accessible, mostly available to either accredited investors or traders on a few centralized crypto exchanges who were willing to provide personally identifiable information.

Hyperliquid changed that, lowering the barrier to entry more than ever before, and causing rival exchanges to compete with increasingly risky leverage offerings.

As a result, Hyperliquid helped spawn a new class of crypto companies known as perp DEXs—short-hand for decentralized exchanges specializing in perpetual futures. For better or worse, perpetual futures have become the new frontier for retail traders to gamble with life-changing sums of borrowed money in the hopes of striking it rich.

For its critics, Hyperliquid, whose representatives declined to comment for this story, is the latest high-powered financial tool engineered for the digitized era of financial nihilism—in a state of mind in which the financial system is acknowledged as meaningless, and which academics argue pervades both crypto and traditional finance today.

“This can be seen as a new dawn for financial nihilists,” Dr. Amin Samman, senior academic in international political economy at City, University of London, and the author of “Currency of Nihilism,” told Decrypt. “What we’re dealing with is a kind of rolling bubble, which is like a simulated carnival mounted from within the financial void—the emptiness, the groundlessness of finance itself, which cannot be avoided.”

The rise of the perp DEX

To understand Hyperliquid, you must first understand perpetual futures. 

First theorized by economist Robert Shiller in 1993—but implemented in crypto by centralized exchange BitMEX in 2016—perpetual futures contracts allow for traders to speculate on the direction of an asset via a bullish “long” or bearish “short” position. These are derivative contracts, meaning that when a trader purchases a Bitcoin long, for example, they don’t technically own Bitcoin itself. Rather, the trader owns a position on a contract that tracks the price of the underlying asset. 

Perps, unlike traditional futures contracts, do not have an expiration date. Perpetual futures, then, can be a useful tool for traders or market makers to indefinitely hedge their bets—buying short positions in the derivatives market, for example, while going long in the spot market—without worrying about the expiration of the contract.

Perps, though, are often combined with dizzying levels of leverage. To enter a leveraged position, users are required to put up collateral, or a security deposit, that will be lost if the position is liquidated. Hyperliquid offers leverage from 3x up to 40x, which means traders can borrow a maximum of 40 times the amount of collateral they pledge, and use that to multiply their winnings—or losses.

Centralized exchanges like Binance, by comparison, offer much higher leverage up to 150x, but require far more hoops to jump through, such as knowledge quizzes, know-your-customer forms, risk assessments, and more.

There are over 100 tokens currently tradeable as perps on Hyperliquid, from established digital assets like Bitcoin to altcoins like Avalanche or highly volatile meme coins, such as Dogwifhat.

Perpetual futures have long dominated crypto trading, with a perps-to-spot trading volume ratio of 2.08 in January 2023, according to CoinGlass, the month before the Hyperliquid DEX first debuted in closed alpha. This ratio has since risen more than 450% in favor of perps, peaking at an all-time high of 11.5 in July 2025. During that month, Hyperliquid processed $319.5 billion worth of perp trading volume, according to DefiLlama, or roughly 56.6% of the entire perps market.

Gregoire Magadini, Director of Derivatives at Amberdata, told Decrypt that leverage and perps are sophisticated trading tools that require complex and “active management” to “ensure risk is well controlled.” The average retail trader who is flooding into perp DEXs is often not well prepared for that, creating room for profits for advanced market participants.

“Market makers are essentially capturing on this uninformed flow, which is how the options business worked—that’s how sports gambling works,” Sam Ruskin, Research Analyst at Messari, told Decrypt. “They are trying to capture the delta between what you think you know and what you actually know. Then you add leverage to that, and it’s an incredibly profitable business for a market maker,” he said.

Samman, the London-based academic, ties the proliferation of leverage among retail traders back to the GameStop short squeeze of 2021. He explained that retail traders back then wanted in on leverage themselves because they felt big institutions were screwing GameStop via leveraged shorts. However, at that time, retail traders had to venture through traditional venues—which is a much harder process. In that sense, Hyperliquid’s easy-to-access leverage is “not an accident,” Samman said. “It’s a response.”

A major factor in Hyperliquid’s success is that it operates on its own dedicated layer-1 blockchain upon which its order book settles—meaning every transaction is on-chain. That’s how the DEX is able to offer gasless transactions, account abstraction, ultra-fast settlement times, and more specialized benefits to users. Ruskin said this setup especially attracts high-frequency traders and market makers. 

Hyperliquid, though, also remains friendly to retail traders with a smooth user interface, easy onboarding experience, and a low barrier to entry. By being able to cater to this casual audience, it is also selling the dream of “get rich or die trying,” Ruskin said, borrowing the famous line from rapper 50 Cent.

“It’s just crypto exemplified. It’s essentially this new American Dream, but for crypto,” the Messari analyst explained. “There’s just a general vibe of urgency with politics, inflation, and all that. So I think it’s kind of the perfect time for crypto, perps, or high leverage.”

The idea is not without reason; some people on Hyperliquid do win—and big. Through November, one trader profited over $108 million primarily by shorting Ethereum; another profited $27 million by shorting HYPE, the native token of the Hyperliquid network; and a third made $29 million by shorting Bitcoin, according to data from HyperDash. 

But when people lose, they lose hard. Such as when crypto influencer James Wynn made a series of bad, highly leveraged perp trades and was liquidated for a total of $100 million.

In the past, big-money trades like this would’ve been made behind closed doors, on a centralized exchange, where transactions are not viewable to the public. But every single trade made on Hyperliquid is publicly available via block explorers like HypurrScan. That’s how and why crypto traders try to hunt down so-called whales on the platform, big money traders like the one who opened a Bitcoin short worth $521 million in March. (The whale closed its position days later with $9 million worth of profit.)

“You could get into a very, very healthy debate about whether this sort of leverage should be offered, if everybody should be able to get into ICO rounds like Monad’s,” Ruskin explained. “In general, I think 99% of tokens just don’t need to exist. And it just creates this general mentality that everybody’s a venture investor, but no one’s qualified to do it.”

The native token of the Monad blockchain, which trades as MON, was added to Hyperliquid for perp trading with 3x leverage the same day it launched. Some tokens are added to Hyperliquid pre-launch, such as MegaETH, with leverage available to users.

“Again, that’s kind of the ‘get rich or die’ trying mentality,” Ruskin said. “I mean, is it our prerogative to take that away from people? Is it our job to protect them? No one forced them to come into crypto,” he said. “The fact is that there are people who want the gambling aspect of crypto—that’s a business.”

Both Ruskin and Magadini from Amberdata warn of Hyperliquid’s dangers but shy away from advocating for restrictions or requiring users to pass risk assessments or other hurdles before trading. Instead, Hyperliquid supporters believe in leaning into the libertarian dream of crypto—leveling the playing field by giving everyone access to the same tools.

“Traditional finance limited these tools to institutions, which created unequal access rather than safer markets. Hyperliquid removes that barrier and gives all users the same technical footing,” Guillaume Poncin, CTO of Hyperliquid infrastructure provider Alchemy, told Decrypt. “A trader in Nigeria can now access the same perp futures infrastructure Wall Street reserved for institutions. This corrects a fundamental injustice in global finance.”

CEX vs DEX

Broadening financial access is core to the crypto vision of creating a new borderless, permissionless money. With Bitcoin and stablecoins already touching most corners of the globe, the goal for many is now to disseminate advanced trading tools. This partly explains why users have been moving away from centralized exchanges to more decentralized alternatives.

To access perps and high levels of leverage on centralized exchanges, users are required to jump through several hoops and may face account restrictions if their answers aren’t suitable. They must also, of course, create accounts using their names, emails, physical addresses, and other personally identifiable information—all of which is then available to tax authorities globally. On Hyperliquid, none of this applies—simply connect a crypto wallet, deposit funds, and place a bet.

In the United States, perps are seen as high-risk financial instruments and are only available on a few regulated, centralized venues. Even Hyperliquid restricts U.S. users from its platform by blocking U.S.-based internet addresses. But as for how restrictive that actually is, Messari’s Ruskin just laughed: “Everybody has a VPN,” he said.

It’s precisely this type of “regulatory arbitrage” available on decentralized exchanges that drives users to Hyperliquid, he added.

“When perp futures and leverage are restricted to those who can access traditional finance or pass strict KYC requirements, we’re just recreating the same gatekeeping that crypto was designed to eliminate,” Jakub Wojciechowski, founder and CEO of Hyperliquid’s primary price oracle RedStone, told Decrypt. “Lower barriers drive innovation, liquidity, and market efficiency. More importantly, they provide people in emerging markets or under authoritarian regimes with access to hedging and trading tools they’d never have had through traditional finance.”

Both BitMEX and BNB Chain, the blockchain network initially created by Binance, confirmed to Decrypt that they have noticed a shift towards decentralized exchanges. BNB Chain pointed to the user experience on DEXs matching that of CEXs now, whereas BitMEX cited custody preferences, censorship resistance, transparency, and regulatory uncertainty.

“It is important to note that perp DEXs like Hyperliquid offer a ‘watered-down’ version of perps offered on CEXs,” Sam Sandiford, head of product and institutional business development at BitMEX told Decrypt. 

“Centralized exchanges like BitMEX still offer the silver lining of performance—while DEXs are considered ‘fast’, they don’t compare to the speed of centralized technology—as well as protection via regulation, customer support, third-party custody, and more. The healthy outcome is the coexistence and competition of the centralized and decentralized,” he said.

It’s this fierce competition for users that has led to exchanges enhancing their leverage offerings, lowering collateral ratios, increasing liquidation thresholds, and more, Aryan Sheikhalian, head of research at venture capital firm CMT Digital, previously told Decrypt. For example, rival perp DEX Aster, which for a short time earlier this year led Hyperliquid in trading volume and revenue, offers leverage up to 1001x on select assets.

Anyone in crypto unfamiliar with leverage got a crash course on October 10, when $19 billion worth of leveraged positions were liquidated, or forcibly closed, across the crypto market—the biggest liquidation event in crypto history. Many market analysts—including Sheikhalian and Carlos Guzman, a researcher at GSR—believe this liquidation cascade was the result of too much leverage in the market. And if similar levels persist, they say, more cascades could be on the way. 

In the wake of the liquidation cascade, Hyperliquid Labs co-founder Yan called out centralized exchanges for “dramatically” underreporting user liquidations. He specifically pointed to Binance’s policy of only reporting one liquidation order per token per second, which Yan speculated could be underreporting by 100x, as liquidations happen in bursts. On Hyperliquid, on the other hand, it’s all on-chain, viewable to anybody, and verifiable.

Binance did not respond to Decrypt’s request for comment regarding its full liquidation figures.

Is Hyperliquid actually decentralized?

But even amid the push toward decentralized alternatives, some onlookers have grown skeptical that Hyperliquid isn’t as decentralized as it claims. 

Much of this bubbled up in March when Hyperliquid delisted the Solana meme coin JELLYJELLY, after a user placed such a bad trade that the platform was forced to take over the position in order to prevent a liquidation crisis that would have threatened other users on the exchange. Though Hyperliquid claimed that the delisting was a collective choice made by the network’s group of validators, industry observers like BitMEX co-founder Arthur Hayes and Bitget CEO Gracy Chen suggested it showed the network is less decentralized than its supporters say it is.

Similar concerns appeared in September when the biggest names in crypto and finance threw their hats in the ring to launch a “Hyperliquid-first” stablecoin. Vying for control of the USDH ticker, the decision would be made in an ostensibly decentralized way—through a community vote among Hyperliquid stakeholders.

But some community members called foul play: The Hyperliquid Foundation controls the majority of staked HYPE, and therefore could control the outcome of the vote. In the end, the Foundation abstained from the vote—but that wasn’t enough to silence the critics. The winner of the bid for the USDH ticker was ultimately Native Markets, a newly formed company that submitted its proposal for the stablecoin suspiciously quickly. It won the bid despite proposals from industry giants such as Ethena, Paxos, and Agora—fuelling more calls of “decentralization theater.”

“The decentralized aspect is part of the utopian strand of financial nihilism,” said Samman. “It was there in Bitcoin; it was there in some of the early blockchain discourse. This is a utopian strand that is imagining a better future arrangement of financial life. I think we should be suspicious of it too, because decentralization is usually a mask for its opposite.”

Ruskin conceded that Hyperliquid is, in effect, a “team-led organization” that is opting for “progressive decentralization,” which refers to the process of starting with centralized control and slowly moving towards decentralization.

After all, in crypto and elsewhere, decentralization can often be viewed as a spectrum—and regardless of the controversies, Hyperliquid is indeed more decentralized than Binance and other centralized exchanges.

And after FTX’s collapse, for Yan at least, that distinction became the difference that mattered.

“All of a sudden, people had a real reason not to trust centralized exchanges—and it wasn’t just mumbo jumbo intellectual stuff. They literally lost all this money, and it was because of centralized exchanges,” Yan told the “When Shift Happens” podcast. He described it as a “light bulb moment” that revealed the world was ready for decentralized finance.

Yan may have been right—the numbers clearly show Hyperliquid filled a demand from crypto-native traders. What happens next, though, could reveal whether the public is ready for the world decentralized finance is creating.