Depth Analysis of Perp DEX: Hyperliquid, Aster, Lighter, edgeX

Original author: JV

Reprint: White55, Mars Finance

Hyperliquid

This generation of Perp DEX has fundamentally changed compared to the previous generation of Perp DEX like “GMX, DYDX”. Since it is still a Perp DEX at its core, the title will still use Perp DEX for discussion.

Starting with “Perp DEX”, it quickly rose to prominence and became known to the public.

Hyperliquid is an L1 public chain, just like Ethereum and Solana. Hyperliquid has a grand vision to be the blockchain that supports all finance and serves as a high-performance on-chain financial trading infrastructure. Hyperliquid offers both perpetual contract trading and spot trading, and it is currently promoting the stablecoin USDH.

Its development path can be glimpsed from the HIP, from HIP-1, HIP-2 to HIP-3, and recently the community proposed HIP-4. HIP-4 aims to create “Event Markets” similar to Polymarket, continuing to expand Hyperliquid's product boundaries. In simple terms, it is a binary market traded on HyperCore, unlike traditional perps, events do not rely on continuous oracles or funding fees, and prices are entirely determined by trading behavior. This proposal has also received affirmation from Jeff (the discussion about HIP will not be elaborated here; a dedicated research article will be written later).

Hyperliquid is affectionately referred to by the community as “on-chain Binance,” a name that makes Binance executives a bit anxious. Alternatively, Hyperliquid can be called the “AWS of Liquidity,” which sounds a bit sexier.

Hyperliquid L1 Technology Architecture and Performance

The Hyperliquid team approached from “first principles” to address issues such as poor liquidity and trading experience, opacity, and fraud in the cryptocurrency market, and developed a high-performance Layer-1 blockchain specifically designed for trading. The architecture is divided into two parts: HyperCore and HyperEVM.

HyperCore is an on-chain matching engine responsible for the placement of orders, matching, margin, and settlement of the Central Limit Order Book (CLOB), with the entire process completed on-chain. It is correct that Hyperliquid chose CLOB over AMM, as the previous experience with the AMM Perp DEX was really not good. CLOB is also the common choice among mainstream Perp DEXs today. (Aster, Lighter, and edgeX also use CLOB, with Aster having both AMM and CLOB.)

HyperEVM is a general smart contract layer that shares consensus with HyperCore, maintaining compatibility with the Ethereum EVM, facilitating the integration of exchange states for other applications. The consensus adopts the modified HotStuff's HyperBFT (Proof of Stake), ensuring a consistent transaction order across the network without relying on off-chain matching.

This tightly coupled sharding design brings speeds close to centralized exchanges: the median transaction latency is about 0.2 seconds (99% of transactions <0.9 seconds latency), with peak throughput reaching 200,000 transactions per second (HyperLiquid official data). Hyperliquid's block production and confirmation are very fast, achieving sub-second finality. With a fully on-chain order book and matching, it has high transparency while still maintaining outstanding performance, truly achieving 'on-chain CEX speed.' Currently, Hyperliquid has not explicitly adopted EigenLayer's AVS (Active Validation Service) scheme, mainly relying on its own chain and consensus to ensure performance and security, with performance and security directly provided by its own chain, not relying on ETH's re-staking network. As of September 2025, the number of active nodes for Hyperliquid L1 is 24.

User Experience and Interface

Hyperliquid offers a trading experience consistent with leading CEXs. The user interface features a traditional order book + candlestick chart design, supporting advanced order types such as limit orders, take profit, and stop loss, along with professional trading tools. Trade settlement is nearly real-time (sub-second level), with smooth interface operation feedback and no lag. It meets the needs of both professional traders and ordinary retail investors. By the way, the sound prompt “da” for opening and closing positions is quite pleasant to hear.

Users can access non-permissioned + non-custodial trading through a web3 wallet, but they need to bridge assets across chains to use them on Hyperliquid L1. Currently, USDC can only be deposited via the Arbitrum chain. Then an Agent wallet is generated (which has only trading permissions and no transfer permissions, with the private key stored locally), and opening and closing positions do not require additional signatures, providing a smooth overall experience. Users are unaware of this Agent wallet.

Hyperliquid is closely connected with the community and responds quickly. For example, after a brief downtime caused by an API failure in July 2025, the team quickly compensated users for about $2 million in losses, demonstrating a “quick response and accountability” approach. Users had a great experience, and the community praised them.

Liquidity and trading depth

As a leader, Hyperliquid possesses extremely deep liquidity and trading volume. Its daily trading volume often reaches tens of billions of dollars, with a single-month perpetual trading volume in July 2025 hitting approximately $319 billion, driving the all-chain perpetual trading volume to a new high of $487 billion that month, with Hyperliquid accounting for about 65%. In mid-2025, Hyperliquid's market share stabilized between 75% and 80%, far surpassing other competitors. In August 2025, the single-month perpetual trading volume accounted for 13.85% of Binance contracts, the highest historical ratio. (The Block data)

The platform supports over a hundred trading pairs, covering mainstream coins and long-tail assets, with quick responses to listings. Due to the use of an on-chain order book model, users' order depths and matching are transparent and visible; combined with the entry of professional market makers and the introduction of HLP market making pools, Hyperliquid achieves ultra-low spreads and low slippage for large transactions on mainstream coins.

Its total locked value (TVL) is also far higher than competitors: as of September 2025, the platform's TVL is approximately $2.7 billion. This enormous amount of funds and depth allows Hyperliquid's contract market to have trading depth and stable funding rates close to Binance for most cryptocurrencies.

The fee structure and incentive mechanism are similar to those of CEX. The basic trading fees for Hyperliquid are 1.5bps for Maker and 4.5bps for Taker, which is slightly lower than mainstream CEXs. Currently, users who hold and stake HYPE tokens can enjoy a fee discount, with a maximum discount of 40% (requiring a stake of over 500,000 HYPE ), similar to Binance’s holding of BNB and VIP level binding.

Vaults

The Hyperliquid treasury consists of three parts: AF, HLP, and user treasury.

Treasury A: Assistance Fund (AF) AF is positioned as the protocol “treasury” / buy engine. It is mainly used for repurchasing (and often destroying) HYPE; simultaneously, it is used for user compensation during special events (approximately 2 million USDC automatically compensated after the API interruption on 2025-07-29). The assets of AF are mainly in HYPE, reducing slippage and execution complexity during large transactions/compensations.

Approximately 93% of the platform's transaction fees are injected into the fund for the repurchase and destruction of HYPE tokens, while the remaining 7% is allocated to the HLP liquidity pool. This design creates a positive feedback loop: increasing trading volume → rising fee income → more tokens repurchased and destroyed (increasing token value) and benefits for the liquidity pool → attracting more users and liquidity.

Data source asxn

Vault B: HLP (Hyperliquidity Provider)

HLP positioning protocol-level market making + clearing backup (including Liquidator component). Anyone can deposit USDC to participate in the PnL distribution of HLP, with a current annual interest rate of approximately 6.7%, and no management/performance fees (unlike the user vault). It can be redeemed after 4 days of deposit. The HLP mechanism makes market making liquidity “open and transparently regulated,” reducing reliance on private agreements with market makers in traditional markets.

User Vaults

Composed of Vault Leader (manager, trading with their own strategy) and Depositor (investor, sharing PnL based on the amount deposited). Similar to a secondary fund and a CEX copy trading system. The Leader takes a 10% profit share (only when profitable), and the protocol treasury does not take a cut.

Community Development and Team

Community Development: Hyperliquid has a highly active global community, with stronger engagement in Europe and the United States compared to the Chinese-speaking region. The official account is very active on social media platforms like X (Twitter), maintaining a long-term leading market share and creating network effects in the perp DEX field.

The enthusiasm of community discussions is also reflected in the value of the tokens. Hyperliquid airdropped its genesis token HYPE in November 2024, distributing a total of 310 million tokens (accounting for 31% of the total supply) to early users. After the HYPE airdrop, its total market cap reached several billion dollars at one point, providing substantial returns for early community participants and establishing a good reputation in the decentralized community. User growth primarily relied on word-of-mouth and outstanding product attraction rather than excessive marketing. This is somewhat similar to Tesla.

Team Background and Financing Situation: Hyperliquid was founded by Jeff Yan, who previously worked at the traditional finance high-frequency trading firm Hudson River Trading and has a background from Harvard University. The core team consists of only about 11 people, known for their elite small team that iterates rapidly. According to Jeff, the project has been entirely self-funded since its inception, rejecting venture capital investments to ensure independent decision-making and prioritization of user interests. This approach of “no VC, no reserved private placements” has enhanced community trust and allowed the team to focus more on technology and the product itself. Most team members come from world-renowned universities and top technology and financial institutions; reports indicate that some traditional finance executives have also joined as advisors (including former CEOs of large banks serving on the board). However, there are market rumors that Hyperliquid may have raised funds through affiliated public entities, boasting strong financial backing (the platform's treasury holds over $500 million in reserves). Overall, the Hyperliquid team is low-key and pragmatic, leveraging their deep technical and trading backgrounds to make the project industry-leading within two years. This background also explains their extreme pursuit of product refinement and user experience.

The essential reason for rapid growth

There are many discussions about the reasons for Hyperliquid's success. In addition to the aforementioned visionary team, excellent product technology, and user experience, we can discuss it from the perspectives of “Dao” and “Shu,” examining different stages to see what Hyperliquid did right.

First, let's look at it from the level of “technique”.

Phase One: Airdrop Incentives

Before the HYPE TGE, there was an expectation of airdrops, and most users came to gain points and airdrops by increasing trading volume. At this time, Hyperliquid did not receive much attention from mainstream CEXs and was not seen as a competitor. Everyone believed that Hyperliquid would fade into obscurity after the TGE, just like GMX and DYDX, with no one trading it.

Phase Two: Compliance Regulatory Dividends

After the HYPE TGE, Hyperliquid's trading volume has not decreased but instead increased. People have realized that something is amiss, and the general consensus is that the cryptocurrency market is under pressure from regulatory compliance, making it difficult for mainstream CEXs to operate in the European and American markets, such as Binance. This portion of “lost” users has been absorbed by Hyperliquid (as can be seen from the user access distribution on the Hyperliquid website). Additionally, some money that finds KYC to be somewhat “inconvenient” has also found a suitable tool.

At this time, Hyperliquid has already been regarded as a competitor by Binance, OKX, Bitget, and others, and has begun to take “actions” to target Hyperliquid. (Evidence can be found in the community, not elaborated here)

Stage Three: Build Codes - Channel Distribution is King

KOL rebate & Affiliate is a common User Acquisition strategy for CEXs. In addition to branding, PR, Community, SEO, campaigns, etc., BD-oriented KOL rebates are an essential growth path and very important.

The proportion of users brought in by KOL commissions varies among different CEXs. For instance, Binance might be around 50%, while Bitget might be around 70%. Additionally, the smaller the CEX, the higher the KOL commission rates and the greater the proportion of users and trading volume. In fact, many small CEXs offer commissions of 90%-100%, using the “customer loss-subsidy commission” “flywheel” for growth.

The rebate rate for Hyperliquid is only 10%, and it is limited to a trading volume of 1B. Based on an average fee rate of 3bps, if the person you invited contributed 300K in fees, you would only earn 30K in income. The focus of the referral program is not on Hyperliquid, but rather on Build Codes.

Few people realize the true power of Build Codes; it is a distribution strategy that genuinely has exponential potential. For developers, there is no longer a need to build high-performance order books or attract liquidity, as Hyperliquid provides the necessary infrastructure. For Hyperliquid, there is no longer a need to manage product promotion, user acquisition, or even product innovation, as all of these are delegated to the builder network. It's somewhat similar to a Swiss team I was previously with (UBS background) that launched a Perp DEX using a white label solution; the direction was correct, but unfortunately, the product capability was lacking. In fact, the previous Binance Broker and OKX's cloud exchange/nodes were similar solutions, but the essential difference of Build Codes lies in its ease of access, low barriers to entry, and on-chain transparency.

Currently, Phantom wallet, Axiom, UXUY, PVP.trade, and others have integrated this solution. So far, Phantom has contributed approximately 40K new users, and PVP.trade has generated an income of 7.5m in a single day. At present, I have also completed the development of a basic version of a perp DEX and am preparing to leverage previous experience and channel resources for growth. Those interested can communicate together.

In addition to Build Codes, there are also powerful tools like CoreWriter and HIP-3, but the threshold is slightly higher, and due to space limitations, I won't elaborate on them here.

“Dao” - Those who attain the Dao receive much assistance.

Although the analysis of the reasons for Hyperliquid's success above is relatively detailed, it is not essential. Many interpretations of Hyperliquid's success also remain on the surface.

But the essence can be summed up in one sentence: Hyperliquid has taken up the banner of the “spirit of blockchain”—openness, transparency, decentralization, and user sovereignty. Just like Binance back in the day carried this banner against traditional finance, whether it is BTC maximalists, industry OGs, or ordinary crypto users, all stand by Binance. What truly gathers “people's hearts” is the real spirit of blockchain.

From the user's perspective, many CEXs indeed have issues such as centralized black boxes, eating into customer losses, and acting as counterparty to users. From the perspective of CEX owners, they also face increasingly stringent compliance and regulatory challenges. Therefore, many CEXs are turning to DEXs.

Therefore, Binance's heir - Aster has emerged.