Can Hyperliquid’s HIP-3 keep the ‘everything exchange’ crown?

Key Takeaways 

Why is Hyperliquid’s HIP-3 upgrade a game-changer? 

It allows anyone to deploy their perps market on Hyperliquid, from prediction markets to on-chain stocks.

Will it benefit HYPE’s value? 

Yes, high growth will drive more fees and help with HYPE buyback. 

Hyperliquid [HYPE] rolled out the much-awaited upgrade that analysts believe will help achieve its “everything exchange” vision. 

The upgrade, also known as HIP-3 (Hyperliqiuid Improvement Proposal 3), will enable permissionless perpetual markets by third-party builders on the platform. 

Think of it as a marketplace, like an app store, but for perps, and it’s more decentralized. Users can then choose what and where to trade, but under the hood, they’ll be using Hyperliquid. 

From trading on-chain stocks, prediction markets, and anything in between, HIP-3 enables all of that. Reacting to the update, Ryan Watkins, a mega HYPE bull and Founder of VC Syncracy Capital, said, 

“Christmas came early to Hyperliquid. Now loading, the everything exchange.”

Source: X

Long-term impact on HYPE

Speculation and stablecoins have become key narratives this cycle. The recent perp DEX explosion further cemented this.

For the unfamiliar, perps or perpetuals allow traders to increase their position and potential gains with limited capital. But the loss can get bigger too. 

As of writing, Trade XYZ, a perp trading for stocks, and Ventuals, which allow users to trade pre-IPO companies with 10x leverage, came live on the platform. 

If demand for HIP-3 grows, the trading volume on Hyperliquid infrastructure increases. This translates to higher fees that help buy back HYPE tokens.

Overall, the value accrual could boost HYPE value if builder-deployed perps go mainstream. 

Besides, each builder must stake 500K HYPE before launching on the platform. This adds to the buying pressure and flywheel that ultimately benefits HYPE holders.

Even so, the 500K HYPE has been deemed as expensive by some analysts, especially if the market doesn’t pick up traction. On top of that, the stake can be slashed if the builder breaches the on-chain requirements. 

“To ensure high-quality markets and protect users, deployers must maintain 500k staked HYPE. In the event of malicious market operation, validators have the authority to slash the deployer’s stake by conducting a stake-weighted vote.”

That said, Hyperliquid remained dominant in the on-chain perp DEX space. At press time, it had $8.24 billion in Open Interest (OI), while Lighter, ranked second with $1.44 billion.

HYPE’s market position and outlook

Based on Bitcoin [BTC] perps alone, Hyperliquid ranked fourth in terms of OI when compared to other top centralized exchanges. 

Source: Velo

Meanwhile, Polymarket was only pricing a 32% chance that the price of HYPE could hit a new all high of $70 by year-end. 

It remains to be seen how HYPE will balance the upgrade and the looming token unlock scheduled to begin next month.