Why can Hyperliquid simultaneously defeat DEX and CEX?

Written by: Pavel Paramonov, Founder of Hazeflow

Translated by: AididiaoJP, Foresight News

I used to be a critic of Hyperliquid. When I first learned about it at the beginning of 2024, I completely dismissed it as just a perpetual contract DEX running on Arbitrum, along with serious centralization issues, closed-source node code, etc.

I was even banned from the Hyperliquid front end due to my address being flagged (I still don't know the reason). At that time, I completely failed to understand why @kirbyongeo, who worked with me at a venture capital fund, was so optimistic about it.

After the HYPE token TGE, its price performance was astonishing, which prompted me to delve deeper and try to understand what was so different about Hyperliquid and why it had so many loyal fans.

After months of research and external influences (which I will mention later), I made my first purchase of HYPE in Q1 2026.

This article is not a price prediction, nor is it about discussing how big Hyperliquid can become in the future or whether you should buy it.

This article simply aims to clarify: what exactly makes Hyperliquid stand out - not just from other perpetual DEXs and CEXs, but from almost all other protocols in the crypto space, and why you should at least understand it.

Hyperliquid is one of the few globally "investable" assets

In January 2026, my Twitter feed was filled with OpenClaw, AI agents, buying Mac Mini to change lives, and so on. I suddenly felt a strong FOMO and then asked myself three questions:

• If everything is made by AI, what will truly have value in the world?
• If the dollar depreciates rapidly and loses its value, what will retain its value?
• If both scenarios happen simultaneously, what is worth investing in?

Fiat currencies may disappear, most precious metals may lose their luster, and oil will also face this in the future (which is why the UAE and Gulf countries are developing new infrastructure to look for new ways to make money).

In the long run, what remains are crypto, the metals and resources needed for AI development, gold, and the stock market. I am not a stock expert, nor a precious metals expert, but I know more about crypto than the average person, so I can build some arguments.

If you look at the top 100 tokens by market cap, most can be ruled out because "they have no real use case beyond staking and governance."

The remaining ones are: BTC, ETH, SOL, BNB, and HYPE.

Ethereum has become an ideological bubble detached from reality. The Ethereum Foundation does not care about the problems occurring, hiding behind the argument of "100% uptime trusted settlement layer."

BNB is a decent choice due to its buyback and burn mechanisms, but you need to understand Chinese to truly grasp what is happening in that ecosystem and how to navigate it.

Solana is a great ecosystem, but it is still unclear what role SOL will ultimately play, and its inflation rate remains high.

In the end, what remains are: BTC and HYPE.

I don't need to elaborate on BTC (if you don't believe in BTC, then you don't believe in crypto). If you extend the time scale, there are many interesting protocols in crypto, but what we are looking for now is the lowest risk and the highest potential return.

And about HYPE and Hyperliquid, there is so much to say.

No investor's infinite upside

Hyperliquid has never raised funds, which I believe was their best decision from the start. Without investors, Jeff can do things entirely on his own terms. You don't need to negotiate, you don't need to spend time fundraising, and you don't need to let outsiders know your plans before you execute them. Complete freedom of action and decision-making.

You only need to fundraise when you don't have enough money to start a project, or when you want to seize a market opportunity urgently. Hyperliquid needs neither.

Telegram is another example of this argument. People like Jeff Yang and Pavel Durov do not need external capital; they have made it on their own. What about the so-called "consulting advice" provided by VCs? People like Jeff are very clear about what they are doing and do not need external advice or validation; he is confident in his decision-making.

I have seen dozens of teams pressured by VCs to leave one ecosystem for another, release tokens early, or delay launches. Once you let external capital and board seats into the company, it is no longer your company.

VCs are in the business of making money, and most of them are very impatient. So from my perspective, Hyperliquid's decision not to let VCs in has been their best decision.

Not to mention the risk of VCs unlocking and dumping tokens after the token launch while simultaneously writing, "the protocol has infinite future," and selling tokens in the public market. These risks have been completely avoided by Hyperliquid from the very beginning.

The HYPE token and its utility

Why does the symbiotic relationship between Hyperliquid and HYPE have almost no real competitors? Because there are no investors and no external influences.

Typical VC-backed exchanges/chains have incentive structures that contain inherent conflicts. Early investors hold large amounts of locked tokens and will sell them without hesitation once unlocked.

Chris Burniske claims that Celestia is the future of finance while representing Placeholder VC in dumping millions of TIA. There are hundreds of such examples. Some VCs, like Polychain, do not speak publicly, but still dump. So ultimately, 99% of products become a "king of the hill" game: whoever sells first wins.

This mechanism cannot happen with HYPE because it has no private investors. The value capture of the tokens (through buybacks) flows more directly between protocol usage and community/team holders, without a separate stakeholder tier.

Why competitors cannot replicate it?

Because unfortunately, most teams are not as smart or risk-taking as Jeff - he had already made millions on his own before founding Hyperliquid.

Lighter has no advantages compared to Hyperliquid, Aster was trying to quickly surpass Hyperliquid, but no enduring financial infrastructure can be built through envy and quick copies. If you want to find protocols that may compete with Hyperliquid, at least look for those that have existed for more than 5 years.

Some might say that token incentive design, network effects, or product execution are more important than capital structure, and "no VC = better alignment" is an oversimplification. This may have some truth. Many fairly issued protocols have failed, and some VC-backed projects have succeeded, but if they really succeed, why does no one care about their tokens?

I use Uniswap and Aave almost every day, but why would I want to buy their tokens? To stake for more (loops), or for governance votes, while private investors always hold the majority voting power? No thanks, not needed.

However, with Hyperliquid, even if you don’t trade perpetuals, you might want to hold HYPE because, as I mentioned earlier, it is one of the few truly investable tokens in crypto, thanks to the countless times the team has made decisions that are not only clever but also "brave".

Infinite trading tools

Hyperliquid is far from integrating most trading tools; currently, only perpetual contracts and binary options (prediction markets) are launched. With its infrastructure and the widespread adoption of perpetual contracts, it has strong capture capabilities in other derivatives trading markets.

Hyperliquid has already brought more "traditional" markets like precious metals and stocks onto the platform. But traditional trading tools have not been fully introduced yet; I am referring to vanilla call/put options.

HIP-3 has already brought a large number of traders from outside the crypto circle. In fact, most of Hyperliquid's current trading volume comes from precious metals, oil, and the S&P 500 rather than crypto assets. Having this new user base, it makes complete sense to introduce more tools they are familiar with.

Currently, no protocol has been able to make options work in crypto long-term: Hegic, Ribbon Finance, Lyra have all failed. Aevo had real momentum in 2024 and was even seen as a competitor to Hyperliquid, but its order book is still off-chain.

Hyperliquid is expected to continue attracting crypto traders from Binance, Bybit, OKX, while also pulling commodity traders from traditional exchanges, potentially completely dominating this niche within the options market. The reasons for crypto traders to turn to Hyperliquid are already clear, and this migration is likely to continue accelerating.

But the more difficult question is:

Why would non-crypto options traders leave Nasdaq or the New York Stock Exchange for Hyperliquid?

Nasdaq is reportedly exploring 24/5 trading, but Hyperliquid is already 24/7. Lower fees, instant settlement, no position limits, lower margin costs, higher capital efficiency, non-custodial design, and no geographical restrictions.

There are various reasons that could lead traders to shift the same assets from traditional exchanges to Hyperliquid, and besides that, they can build truly powerful composable strategies on HyperCore.

Unfortunately, I have no insider information about future updates for Hyperliquid, but I believe that the launch of vanilla options will happen sooner than everyone expects.

Team attitude and behavior

Hyperliquid has never spent money on marketing, and more importantly, it has never spent money to build an ecosystem itself. Building an ecosystem has been a pit that everyone has repeatedly stepped into over the years.

Wasting investors' money on funding "builders," who then take the funding and run away (the core team also left shortly after the TGE). This culture of distributing ecosystem funding has always seemed foolish to me, and I am glad to see that people are finally starting to realize this.

Where is the ecosystem of Blast? What about Berachain? What about the ecosystems of Movement, Eclipse, Sui, and zkSync?

People who want to use Hyperliquid or build on it do not need to directly converse with the Hyperliquid team. Smart decisions like setting barriers to market creation and not allowing network garbage are sufficient.

Hyperliquid has a world-class team. It's not that they hired the best people, but rather their management style. Think Rockstar, Telegram, Valve instead of Google, Meta, or Apple.

Hyperliquid is a great example of Peter Thiel's philosophy in "From Zero to One." The idea of creating a perpetual DEX is not new, but the ruthless execution and the attitude of ignoring everything else is indeed new.

I run a research company myself and have never done paid marketing or advertising, so Hyperliquid’s approach resonates deeply with me. People will notice good products sooner or later and come to them proactively, not because the company is shouting loudly, but because it is good enough and remains quiet.

The value of on-chain order books

Hyperliquid does not waste energy competing with other perpetual DEXs but competes directly with crypto CEXs and mainstream CEXs. This point alone says it all.

Its trading volume share relative to Binance has grown from 8% to a recent 13.6%, consistently exceeding Robinhood's trading volume. When traders choose to open perpetual positions, Hyperliquid has now truly entered the same consideration set as Binance and Bybit—something that dYdX or GMX could never achieve.

Another important point is: Hyperliquid was born after the FTX collapse, so you don’t need to persuade people about the benefits of self-custody; that is now common knowledge.

Traders previously tolerated the custody risks of CEXs because DEXs were slower, had worse liquidity, and higher fees (gas ate into the PnL of every order). Once execution speed and depth reach the level of Solana or Rollup, the only reasons to stay on CEXs will be convenience and liquidity—and that is precisely Hyperliquid's home ground.

Interestingly, the previous discussion of DEX vs. CEX was one-sided, whereas now it has become Hyperliquid vs. CEX, and the discussions have become very serious.

Despite being completely different, Hyperliquid and Binance share many commonalities. Hyperliquid has replicated the growth path of Binance. Binance did not stay at a spot exchange but continuously expanded through bundling perpetuals, options, yield farming, Launchpads, etc. A platform that only does perpetuals will only compete with other perpetual platforms, whereas a platform that continually expands its product line begins to compete with the category of "full-service exchanges"—that is the domain of CEXs.

Hyperliquid belongs neither to the crypto market nor the traditional market

Most people in the crypto circle do not understand interest rates, so they miss the core liquidity mechanisms driving Hyperliquid’s value. People in TradFi, on the other hand, view crypto as something without "real" value and also miss it.

Hyperliquid competes on funding rates just as brokers compete on margin rates—if you offer the cheapest leverage with no apparent trade-offs, large funds will come to use your platform. $PURR and Hyperliquid Strategies are among the only treasury management firms in the world that achieve positive yields.

Grayscale points out that Hyperliquid’s business model resembles that of traditional exchanges, but HYPE is a crypto asset rather than equity in a company.

Although Grayscale's HYPE ETF has launched, that is just a sideline. The real catalyst is: Hyperliquid could become the place where the largest institutional players acquire cheap leverage— as long as its perpetual funding rates are lower than elsewhere, the funds will flow in, regardless of whether the participants care about crypto.

Traditional valuation frameworks do not apply here because this product is fundamentally different from anything else. HYPE is not a stock (no dividends, no equity claims, no corporate structure), but it is also not a purely speculative crypto asset completely unhinged from cash flow (which 99.9% of protocols in crypto are).

Rare combination of architecture + behavior

Hyperliquid maintains an open architecture, loyal to DeFi's principles of transparency and self-custody while building around a highly optimized core application, and has already proven that it can attract and retain users.

It is both an open, composable protocol (like DeFi infrastructure) and a very well-polished consumer-grade product with strong user stickiness (like a well-operating exchange app). Most projects can only choose one, but with Hyperliquid, you don't have to choose sides.

Do not evaluate Hyperliquid with a single framework

Hyperliquid's revenue for 2025 is about $800 million, but this still only accounts for about 2% of the entire crypto perpetual trading revenue, and is negligible compared to the scale of the global traditional derivatives industry. If continuous growth is assumed, who knows how high the future figures could be.

Hyperliquid is:

• 
  
• A token that acts like a profitable and continuously growing enterprise
• A DeFi protocol with centralized app-level retention and UX
• An independent product connecting Web2 and Web3 traders

So any single comparative set (pure crypto, pure equity, or pure exchange) will underestimate some dimension of it. There is currently no benchmark or framework that can accurately determine whether Hyperliquid is overvalued or undervalued, so form your own opinions and arguments.