hyperlquid it’s a word you see and hear a lot
in crypto circles these days and this is to be expected given that it has been taking market
share away from major exchanges while its hype coin continues to climb the ranks towards the
top 10 and everyone is wondering just how much potential Hyperlquid has could it become the top
exchange in crypto could it be the top altcoin that everyone has been looking for could Hype
flip soul today we’re going to take a look at what Hyperlquid has been up to and find the answers to
these questions and more including how high hype could go my name is Nick and this is a video you
cannot afford to miss first things first you need to know that nothing in this video is financial
advice it’s educational content intended to inform you about Hyperlquid also do note that some
members of the Coin Bureau team do hold hype in their personal crypto portfolios but of course
we’ll be as objective as possible in today’s analysis if you want to know what other cryptos we
hold and which ones we’re personally considering it’s been around 6 months since we last covered
Hyperlquid and it’s safe to say that a lot has happened since then shortly after our last video
went live the Hyperlquid Foundation announced that it would begin buying cryptos as part of its quote
assistance fund and chose Purr as the first crypto now for context Purr is a cat themed memecoin
that appears to be affiliated with Hyperlquid we flagged it in our previous Hyperlquid review
as a crypto to watch closely since it was noted in Hyperlquid’s documentation perr’s addition to
the assistance fund basically confirms that it could have potential another thing that Hyperlquid
did in January was integrate with a cross protocol making it easier to bridge USDC into Hyperlid from
other chains now for reference Hyperlid does not currently support native USDC and accounts must
be funded by depositing USDC into Hyperlquid’s contract on Arbitum however Hyperlquid recently
expanded its funding options to include native Bitcoin native Ethereum and native Solana
thanks to its integration with a protocol called unit a support for more native cryptos
is expected to come soon and it’s worth noting that native USDC is also apparently in the works
anyways in February this year Hyperlid launched its highly anticipated Hyper EVM now for those
who don’t know Hyperlquid consists of two core components hyper core which powers Hyperlquid’s
decentralized exchange and Hyper EVM which is a generalized execution layer for other DAPs not
surprisingly there’s been an explosion in the number of DAPs and TVL on Hyperlid ever since the
launch of Hyper EVM what is surprising though is that most of these DAPs and TVL appear to be
related to borrowing which could be playing a role in supporting Hypes price more about that a
bit later now another thing that Hyperlquid did in February was introduce native multi-IG wallets
for those unfamiliar multi-IG wallets make it possible to share a wallet with other people
and this makes wallets more secure by requiring multiple signatures for transactions instead
of just one and this is significant because it makes Hyperlquid more appealing to institutions
bridges custodians and so on now March however was when things got a bit messy for Hyperlquid first a
trader selfquidated an ETH long causing the DEX to experience a $4 million loss then another trader
tried to self-liquidate their short of the jelly token by pumping its price on chain according to
Abishek Pawa the founder and CEO of AP Collective Hyperlquid could have faced quote full liquidation
if Jell’s price kept on pumping and that’s when Hyperlid took the controversial decision to
delist Jelly from the deck something that was apparently voted on by Hyperlquid’s validators
to many uh this was proof that Hyperlquid wasn’t as decentralized as it claimed and opened the
door to essentially manipulating markets to protect the decks in response to the criticism
Hyperlquid decentralized the D-listing process making it possible for validators to vote for any
future D-listings on chain hyperlid subsequently decentralized its validator set something that had
actually been in the works since long before the Jelly saga as of April Hyperlid has 21 validators
with plans to increase the validator set to 60 in the coming months and as of right now only 34%
of you are subscribed to the channel so if you hyperlquid led the charge and that was because
activity on its perpetuals exchange started to go parabolic to put things into perspective there
was around $5 billion of open interest on Hyperlid at the start of May by the end of the month that
figure had ballooned to a staggering $10 billion and currently sits around 8 billion and this
might have something to do with the eyepopping announcements Hyperlquid had throughout the month
first Tether launched USDT0 on Hyperlquid at the same time layer zero announced the launch of
Hyperbridge making it possible to bridge USDT and half a dozen other cryptos to Hyperlquid then
a crypto project on Hyperlquid called Hyperdrive announced it would be launching a stable coin
money market and FYI Hyperlquid is one of the top chains by stable coin supply shortly after
that Hyperlquid submitted two letters of comment to the CFTC advocating for 247 futures trading
meanwhile the first ever billiondoll long position was opened on Hyperlquid proving that the DEX is
well liquid and if you’ve been keeping up with the headlines you’ll know that the person behind
this long position turned out to be James Win who reportedly became rich by investing very early
into memecoins you’ll also know that James isn’t a very good trader as many hobbies hyperlquid
positions were closed at a massive loss some have speculated that the purpose of these massive
positions was to promote the decks rather than to make a profit as well-known personalities
like Andrew Tate subsequently did the same whatever the reason the big bets made by James and
others made one thing clear and that’s that having fully transparent dexes might not be the way to
go and that’s because it makes it very easy to hunt positions though many have argued that this
is already done on sexes a posts by Hyperlquid and its co-founder Jeff Yan that advocated
transparency suggest that dark pools won’t be coming anytime soon whatever the case earlier
this month decentralized social media platform Farcaster announced support for the Hyper EVM
highlighting the fact that Hyperlid is slowly expanding to new use cases a few days later Tether
announced that XA0 was live on Hyperlquid bringing the project one step closer to its end game which
is to be the go-to trading platform for all things crypto and tokenized assets and this brings me to
the moment you’ve all been waiting for and that’s hype’s price action and potential i’ll start by
saying that at the time of shooting Israel and Iran are at war so take this analysis with a grain
of salt as it could change for the better or for the worse especially in the short term with that
said Hype’s recent price action is predictable given the circumstances it took a tumble back in
April because of Trump’s tariffs and its price has been increasing ever since activity on its decks
started increasing in May now to bring you up to speed a portion of all fees on the Hyperlquid
decks are used to buy back and burn hype and it’s also used to pay for fees on the Hyper EVM
all of which are also burned in theory this means that hype should keep going up and to the right
along with the trading activity on the hyperlquid decks and the onchain activity on the hyper EVM
in practice however this doesn’t seem to be the case as you can see open interest on a hyperlquid
is down since May and the same is true for trading volume and the number of new users but hype’s
price continued to climb during this period from our perspective there’s two possible explanations
for this decoupling the first is speculation hype has been one of the top performing cryptos in
recent weeks and this has lots of investors aping in the second explanation is DeFi leverage
specifically Wales borrowing against hype to buy hype if this sounds familiar that’s because we’ve
seen the same kind of activity on other large layer ones like SUI for example in Hyperlid’s
case it’s much more obvious but the TVL in its largest borrowing and lending protocols has grown
by around $400 million in just the last 30 days specifically on Hyperlend Felix and Morpho given
this fact we believe it’s possible that Hype Wales have been helping support its price action
by borrowing against their hype to buy more hype again this is not unique to Hyperlquid it’s
something that’s been done by lots of other crypto whales these days including with Bitcoin however
it goes without saying that it’s a bit different in Hyperlquid’s case because DeFi leverage isn’t
the only form of leverage on its chain there are billions of dollars of leveraged positions on its
decks in the event of an exogenous shock such as an escalation between Israel and Iran there could
be a mass liquidation event on the decks that can’t be absorbed by the hyper liquidity provider
or HLP vault without getting too technical the HLP is effectively a communityrun market maker
that operates as the counterparty to trades on the hyperlquid decks the good news is that HLP
has seamlessly processed tens of billions of dollars in liquidations in the past the bad news
is that Hyperlquid is much bigger today than it was during the last tariff induced market
shock and any shocks related to Israel Iran could be bigger too and that’s why it’s possible
keyword possible that hype could fall as low as $23 in the short term if there’s another
escalation in the Israel Iran conflict that results in mass crypto liquidations that the HLP
has difficulty processing but again this assumes another significant escalation in the absence
of any further escalation hype could experience a standard pullback to around $33 before moving
higher and this begs the question of how high hype could go in the coming months and the answer
fundamentally depends on how much adoption Hyperlquid gets particularly its derivatives
decks now to be honest Hyperlquid could see a lot of adoption as it offers a user experience
comparable to that of sexes without KYC in other words Hyperlquid is analogist to centralized
exchanges in the previous cycle and that’s exactly why we stand by our previous prediction which is
that Hype will hit a price of somewhere around $300 and this would give it a market cap of around
$100 billion which is roughly how big Binance’s BNB got during the previous cycle notably Hype’s
price action could come to approximate that of exchange tokens meaning it goes up and to the
right absent any exogenous shocks or hacks etc etc and if you want to trade hype then
check out the Coin Bureau deals page over in its upcoming milestones and the main milestone
to watch out for is the mainet implementation of hyperlquid improvement proposal 3 aka hip 3
it was announced back in May and is currently on testn net with the mainet launch pending put
simply HIP 3 will make it possible for anyone to launch perpetuals on the hyperlquid decks the same
way that anyone can launch tokens on spot dexes now to mitigate against bad actors each perpetual
pair will require a stake of 1 million hype that will be slashed if there’s any market manipulation
additional milestones for Hyperlid can be found in interviews with founder Jeff Yan back in April he
noted that Hyperlid was focused on stable coins to refresh your memory Hyperlquid is one of the
largest chains by stable coin supply and volume but still doesn’t have native USDC or native USDT
for that matter and we suspect this is due to Hyperlquid’s relative centralization major stable
coin issuers may be hesitant to launch their tokens natively on chains that aren’t sufficiently
decentralized circumstantial evidence for this can be found in the fact that BNB also doesn’t have
native USDC or USDT either in case you didn’t know it’s believed that Binance co-founder Changpang
Xho or CZ practically controls BNB another thing Jeff has mentioned is the possibility that more
and more crypto projects will start launching and listing on Hyperlquid in lie of other dexes and
sexes there’s just one problem though and that’s that Jeff has said there are only 10 people
working on Hyperlquid in an interview in May and this is consistent with data from Electric
Capital’s developer dashboard which notes that Hyperlid had just seven monthly active developers
seven and this explains why Van warned back in January that Hyperlid needs more developers
if it wants to continue growing its ecosystem this is alarming when you remember that Hyperlquid
isn’t the only perpetuals exchange out there and it could soon face extreme competition from dexes
being launched by sexes the elephant in the room here is by real the DEX recently announced
by Bybit that’s expected to launch on Salana sometime in Q3 and it looks like this will be just
in time for the SEC’s quote conditional exemptive relief framework which would make things like DeFi
temporarily legal in the US without restriction hyperlquid has been dominating the derivatives
DEX space so far but this could change as bigger players get involved and this brings me to the
challenges that Hyperlid could face the first challenge is the one I just mentioned and that’s
competition bybit might be the first big sex to announce its launch in a DEX but you can bet that
it won’t be the last and there will be many more when the SEC eases DeFi restrictions it’s hard
to see how Hyperlid will be able to maintain its market dominance in the face of this competition
and the small size of its team makes it seem like it could lose this market dominance faster than
you’d expect sexes literally have thousands of employees and Hyperlquid apparently only has 10
and this ties into the second challenge Hyperlquid could face and that’s adoption as I mentioned
earlier how big Hype gets fundamentally depends on how much adoption its DEX gets in turn how
much adoption its DEX gets fundamentally depends on how many users there are who already don’t
have accounts on sexes that offer perpetual futures and are comfortable using a derivatives
DEX as many have pointed out Hyperlid’s total addressable market might not be as big as meets
the eye and it’s possible that the Hyper EVM edition was because the team knows this in theory
Bybit launching a DEX of its own suggests that the total addressable market is big but in practice
it could be launching a DEX because the intention is taking this limited market share away from
Hyperlquid and this relates to the third challenge Hyperlquid could face and that’s integrations as
I mentioned earlier it’s possible that stable coin issuers are hesitant to launch native tokens on
Hyperlquid due to the centralization of its chain however it’s also possible that stable coin
issuers aren’t launching native tokens on Hyperlquid because the centralized exchanges they
work with don’t want them to after all it’s in the economic interests of the stable coin issuers
that the supply of their stable coins continues to grow as large as possible the only reason they
would go against these economic interests is if there’s some unforeseen risk or because their
economic partners are pressuring them to do so news flash but Hyperlquid is a direct competition
to the sexes which also use stable coins for spot and perp trading with all that said though these
challenges are mostly hypothetical for the time being bybits decks may not get that much adoption
hyperlquid’s decks could continue to take market share from sexes and its chain will probably
continue integrating with popular crypto projects and protocols this has been the trend over the
last few months and there’s no reason to think they will change world War III notwithstanding
and the same is true for Hypes price action which has been going up and to the right alongside the
hyperlquid decks and its ecosystem of DAPs its recent price action shows demand from fee buybacks
and defy leverage are an effective combination that could help push hype higher than most expect
even though the sustainability of these trends can be questionable crypto has proven time and time
again that the market can remain irrational longer than investors can remain solvent the fact of the
matter is that there are few cryptos with better fundamentals than Hyperlquid all hype has been
doing is reflecting that fact and will continue to reflect it so long as people continue to
speculate in crypto we reckon that’s going to be the case indefinitely which is why some of
us hold hype in our personal portfolios a recent changes at the SEC all but guarantee this and you
can find out about those by watching this video right over here and if you’re not subscribed to
the channel yet you can do that right over here as always thank you very much for watching
and I’ll see you in the next one nick out
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