Hyperliquid growth driven by leveraged degeneracy, trade sharing

Although mostly indistinguishable from a regular crypto exchange — it offers derivatives trading and issued its own proprietary coin — Hyperliquid has managed to capture market share through two particularly successful features.

While it debuted with a generous airdrop of its HYPE token, this is nothing out of the ordinary. After all, many other crypto exchanges have tried giving away free money in the hopes of generating a return via media attention.

However, the HYPE airdrop did give the token enough momentum to fund its team and allow it to go on to tweak two pages from the conventional exchange playbook.

First, Hyperliquid created a platform that allows users to create hedge fund-like Vaults and trade other people’s money. Despite being geo-restricted from the US (that activity is illegal without Securities and Exchange Commission (SEC) registration), these Vaults helped extend momentum from its $1.2 billion airdrop.

During the exchange’s early weeks, it gave influencers the power to blow up a fund with other people’s money. Many people watched, were entertained, and made generally irresponsible decisions to contribute.

Of course, the practice gained plenty of attention among US users, but for its part, Hyperliquid still claims to prohibit US users from creating Vaults.

HyperLiquid lets influencers experience blowing up a fund

Obviously, copy-trading degenerate crypto traders was an unsustainable business model. Luckily, Hyperliquid had another groundbreaking idea up its sleeve.

Namely, it began to popularize a new feature that remains its most publicized operation: an on-chain leaderboard.

Tracking winners and losers on margin

For the first time, a top 10 crypto derivatives exchange publishes every transaction of its best traders for the world to see. Easily sorted by profit and loss (PnL) by day, week, month, or all-time, market observers can click on any of Hyperliquid’s thousands of traders to view every trade they make.

Third-party dashboards extend Hyperliquid data to provide even more robust analytics.

To be fair, there are plenty of platforms that monitor the value of crypto portfolios over time, including Etherscan. However, Hyperliquid’s leaderboard is unique in that nearly all of its largest traders use massive leverage and, therefore, gain and lose disproportionate amounts of money.

In all, this deluge of transparency has created a firehose of marketing content. Although leveraged trading has been commonplace on centralized exchanges for a decade, data on individual traders has traditionally been obscured from public view.

Hyperliquid is crypto’s first instance of a major derivatives exchange that publishes each transaction of each trader’s journey toward spectacular gains or losses.

Rags-to-riches stories attract market share for Hyperliquid

Thanks to these two features, Hyperliquid’s market share is growing relative to centralized exchanges like Binance, ByBit, OKX, or KuCoin.

Its perpetual futures average volume has grown to over 8% of Binance’s and about 4% of aggregated centralized exchange volume over the past nine months.

Comparing overall derivatives activity, Hyperliquid processed about 8% of the volume at Binance within the last 24 hours: $4.4 billion to Binance’s $56 billion.

Hyperliquid’s numbers look even more respectable against smaller exchanges. It processes about one-fifth the value of derivatives as Bybit or OKX.

For spot trades — as in non-derivative swaps between actual tokens — Hyperliquid processed less than $400 million in the past 24 hours. On this metric, Binance dwarfs Hyperliquid with over $15 billion in spot trades today.

Nevertheless, Hyperliquid is certainly growing quickly. Indeed, there’s already speculation that a memecoin listing at Binance was behind a recent liquidation that could have set back the Hyperliquid team. Perhaps a rivalry is brewing.

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