Could Coinbase Perpetuals Spell Doom for Hyperliquid?

U.S. regulators’ 180-degree pivot from scrutinizing crypto to embracing it has resulted in a flurry of new activations in 2025, and now Coinbase, the largest centralized exchange (CEX) in the country, has entered the perpetual futures market, leaving onchain natives wondering if it will impact Hyperliquid, the DeFi darling of this market cycle.

Coinbase Perpetuals, which launched on July 21, marks a major milestone for perpetual futures trading in the United States and comes less than a week after Kraken launched its own perpetuals offering in select U.S. territories.

Prior to Commodity Futures Trading Commission (CFTC) chair Mersinger’s unofficial endorsement of perpetual trading in the United States, most activity was conducted offshore, or on decentralized exchanges (DEXs) such as Hyperliquid. While Hyperliquid is technically not available to U.S. residents, it is presumed that most users circumvent the geoblock through a VPN, as the DEX does not require know-your-customer (KYC) verification.

Now, with perpetuals green-lit in the United States via CEXs such as Coinbase and Kraken Pro, many traders are debating whether this spells trouble for Hyperliquid’s dominant market share.

While Hyperliquid has grown significantly over the last year, it remains relatively small compared to Binance, the leading derivatives trading platform. Over the last 24 hours, Binance has processed $128 billion in perpetual futures volume, with $39 billion in open interest. Meanwhile, Hyperliquid has recorded just $17 billion with $14 billion in open interest.

Historically, CEXs have dominated their decentralized alternatives as traders’ preferred venues, but Hyperliquid has established itself as potentially the most successful DEX iteration yet, and some analysts believe that Coinbase’s foray into perpetuals will not harm Hyperliquid’s market share, and potentially bolster it.

“Coinbase perps is net bullish for Hyperliquid. Power users will eventually want composability, low fees and non-KYC. Eventually, they’ll funnel into Hyperliquid. On the other end, I don’t think we see leakage within Hyperliquid’s core users towards a more centralized venue. Coinbase will do all the user acquisition, and without a VPN blocker, the right people will find their way onchain eventually,” wrote Messari researcher Sunny Shi on X after Coinbase perpetuals were originally announced in June.

Hyperliquid Dominates DEXs

Hyperliquid, which launched in 2023, has become the go-to onchain perpetuals platform and is regularly among the Top 10 volume generators for high-demand assets such as BTC and ETH. The platform’s perpetual and spot volumes have been in a consistent uptrend since the launch of its HYPE token in November 2024.

The DEX boasts deep liquidity, which has been a pain point for previous DEX iterations as it caps trade sizes due to price slippage. Hyperliquid’s order books, on the other hand, have handled billion-dollar trades without a hitch.

Hyperliquid also benefits from the reputational boost it received from its substantial airdrop, which distributed 30% of the HYPE token supply — now worth almost $15 billion — to its early users. The wealth generation event has left many users who missed the first airdrop foaming at the mouth and speculating on a future second HYPE airdrop.

The exchange has averaged roughly $200 billion in monthly perpetuals volume in 2025, hitting an all-time high of $249 billion in May. The second-largest decentralized competitor is Jupiter, a Solana-based DEX, which has processed between $17 billion and $36 billion in monthly volume.

Hyperliquid Spot Trading

While leading centralized exchanges such as Binance, Coinbase, and Kraken still command the lion’s share of spot markets, Hyperliquid is slowly gaining on the competition, as showcased by the platform’s domination of the spot PUMP trading market.

In the first 24 hours of trading, Hyperliquid processed nearly $185 million of spot PUMP trades, while Bybit and MEXC traded roughly $160 million each. The only centralized exchange to outperform Hyperliquid on the opening day was Gate, with $267 million of spot volume.

Neither Binance nor Coinbase had a horse in the race, but Hyperliquid’s market share of spot trading volume on a token as highly anticipated as PUMP sparked renewed belief in the DEX’s vision of replacing CEXs.

Coinbase NFT Moment?

DeFi bulls remain convinced that Coinbase’s perpetuals launch will have little to no effect on Hyperliquid, with many citing Coinbase’s NFT platform launch in 2022, which was widely expected to unseat Opensea, the leading NFT marketplace at the time.

However, the platform struggled to gain traction and recorded fewer than 200 transactions on its opening day, failing to compete with legacy on-chain platforms.

Notwithstanding the harsh comparison, there are pros and cons to centralized perpetual trading on a significant scale. In decentralized solutions, all trading positions are publicly accessible and transparent, which potentially promotes “stop-hunting” and manipulation tactics.

Stop-hunting is a practice observed across markets, where well-funded entities or groups of users attempt to manipulate the price of an asset to trigger a large position’s stop-loss, thereby forcing the exit of the position. On a large enough scale, this can trigger short or long squeezes in the markets in an unnatural, yet fair, manner.

Not only are positions visible on a DEX, but they can also be traced directly to a wallet. One recent example of so-called hunting occurred with a user named James Wynn, who was publicly trading billion-dollar leveraged positions on Hyperliquid with tight stops and liquidation points which would regularly get tagged. Over the course of a few weeks, Wynn depleted his wallet, which had been $80 million in profit at one point, to all but zero.

However, it is worth noting that users can transfer their funds to new anonymous wallets, and Wynn was intentionally drawing attention to his positions.

On centralized exchanges, these liquidation pockets can still be identified, but each user’s exact position remains anonymous. In addition to the anonymity factor, CEXs often tout higher performance, as trading systems run more smoothly and efficiently in a centralized system.

“CEXs like Coinbase serve up deeper, denser liquidity for perps offering tighter spreads and smoother execution when markets turn volatile,” Hank Huang, the CEO of Kronos Research, told The Defiant.

“But DEXs like Hyperliquid are closing the gap fast, and what they lack in depth, they deliver in real-time transparency: every trade and takedown is on-chain. In a market where trust is king, that level of clarity could be the catalyst that pulls serious capital on-chain,” Huang concluded.