Author: Alvis
Recently, the crypto market has continued to decline, and the TVL (Total Value Locked) of major protocols has declined. However, in this gloomy environment, there is one protocol that has bucked the trend and increased rather than decreased, and that is Hyperliquid.
With its unique profit mechanism and strong trading volume, its token HYPE not only has resilience in the declining market, but also earned $2.19 million in protocol revenue within 24 hours, and its 7-day revenue even surpassed Pumpfun, ranking 7th in the global revenue list.
What makes Hyperliquid stand out in the Crypto Winter? How did it break the industry curse and achieve double growth in revenue and market value? Let's explore the driving force behind this phenomenon.
High-performance Layer1 - Fully On-chain Order Book Perpetual Exchange Hyperliquid DEX
Hyperliquid's core product is its perpetual contract DEX, which allows traders to obtain up to 50x leverage on BTC, ETH, SOL and other assets. It has a fully on-chain order book and zero gas fees. Unlike Solana, which supports a wide range of decentralized applications (DApps), Hyperliquid's layer-1 is built specifically to optimize DeFi trading efficiency.
As of February 28, 2025, Hyperliquid (HYPE) ranked 7th in protocol revenue with $2.19 million in 24-hour revenue and $12.61 million in 7-day cumulative revenue, surpassing emerging protocols like Pumpfun and establishing an absolute dominance in the decentralized perpetual contract arena.
Multi-dimensional Innovation in Revenue Structure
Hyperliquid's revenue sources have broken through the traditional DEX's single model of relying on trading fees, forming a three-stage rocket model:
- Derivatives trading fees (accounting for 70%+ of revenue): The perpetual contract's tiered fee system of 0.01%-0.035%, combined with a daily trading volume of over $10 billion, forms the basic revenue foundation;
- Spot auction revenue: Through the HIP-1 token Dutch auction mechanism, the single-project listing fee can reach $300,000-$500,000, with an annualized revenue potential of over $140 million;
- Cross-chain bridge and ecosystem service fees: With the launch of HyperEVM, gas fees (paid in HYPE) and smart contract service fees will become new growth drivers.
Its core data indicators show a growth logic that is completely different from traditional DEXs:
1. Disruptive breakthroughs in trading scale and efficiency
The daily trading volume is stable at around $9 billion, with a peak exceeding $10 billion, which is 6%-10% of Binance's perpetual contract trading volume, far exceeding that of similar decentralized platforms (such as dYdX, GMX, etc.).
The TVL/revenue ratio is only 50.6 (TVL $638 million vs. 7-day revenue $12.61 million), significantly better than Uniswap (184.9) and Raydium (12.7). The top DEX Uniswap had revenue of $22.8 million in the same period, but its higher TVL highlights Hyperliquid's profitability, fully demonstrating that its capital utilization rate has reached the industry's top level.
Token Economics: Building a Perpetual Motion Machine for Value Capture
The HYPE token model design innovatively links the protocol's revenue directly to the token value:
Triple-driven Deflationary Engine
- 70%+ revenue buyback and burn: The platform will use over 70% of the derivatives trading fees and spot auction revenue to repurchase and burn HYPE. Based on the current revenue level, the annualized burn volume can reach 150 million, accounting for 21.4% of the circulating supply;
- Staking deflationary mechanism: Validators need to stake HYPE to participate in the consensus, with the current staking APY reaching 18.9%, attracting over 31% of the circulating supply to be locked;
- Expansion of token utility scenarios: After the launch of HyperEVM, HYPE will become the necessary token for cross-chain gas payment and smart contract deployment, with new demand drivers from both developers and users.
Time Game in Token Distribution
Controllable unlocking risk: The team's tokens (23.8%) are locked until December 2025, with a linear release (24 months), which is more conservative compared to similar projects (such as dYdX's immediate unlocking);
Community incentive reserve: 38.9% of the tokens are used for ecosystem building, continuously attracting external liquidity through trading volume mining, developer incentives, etc. Data shows that every $1 of incentive can leverage $5.3 of TVL growth.
Valuation Model Construction: Multi-dimensional Value Reassessment
1. Relative Valuation (Industry Comparison)
HYPE's current $6.7 billion market cap corresponds to a P/S ratio of 5.8, which is at the low end of the industry. Considering its revenue growth rate is 3-4 times that of its peers, the PEG ratio is only 0.27, indicating it is indeed undervalued overall.
2. DCF Model Calculation
Key Assumptions:
- Future 3-year revenue compound growth rate of 55% (conservative estimate)
- Maintain staking yield above 15% to attract long-term holders
- HyperEVM ecosystem contributes over 25% of new revenue
Discounted Results:
- Reasonable valuation at the end of 2025: $48.2 (+130%)
- 2026 target price: $79.5 (PEG back to industry average of 0.8)
3. On-chain Value Capture Coefficient (VCC)
Introducing the TVL/(MC/TVL) metric:
- HYPE VCC=6.38/(69/6.38)=0.59
- Industry average=0.31
This data shows that every $1 of TVL in the Hyperliquid ecosystem creates 1.9 times the value of the industry average.
Risk Factors and Market Misjudgment
1. Re-examining the "Centralization Concern"
Hyperliquid's native token HYPE was launched through an airdrop in November 2024, covering 94,000 unique addresses. This distribution drove a $2 billion market cap on the first day, indicating a high community adoption rate.
However, on-chain data shows that the team controls 78% of the staked amount.
Although the node centralization has raised controversies, it should be noted that:
- The validator committee uses a dynamic rotation mechanism, with 1/3 of the nodes randomly replaced every epoch (about 4 hours);
- The open-source process is being implemented in stages, and the RustVM core code has already passed the CertiK audit.
2. Deeper Moats in the Competitive Landscape
- Liquidity moat: The network effect formed by the $9 billion daily trading volume means that competitors need to invest at least $1.8 billion to conduct a vampire attack (based on 0.2% incentives), while HYPE's buyback mechanism can instantly offset over 30% of the impact;
- Developer migration cost: HyperEVM is fully compatible with Solidity, but achieves 10 times the performance of EVM chains through HyperBFT, forming the advantage of "no development threshold, experience differentiation".
Conclusion: Strategic Opportunities in Value Reconstruction
Hyperliquid has reconstructed the rules of on-chain value flow through technological paradigm innovation:
- Short-term (0-6 months): Benefiting from the surge in gas demand brought by the launch of HyperEVM, coupled with the peak season of perpetual contract trading in Q2, the target price is $35-42;
- Medium-term (6-18 months): Diversification of the revenue structure due to ecosystem expansion, PS is expected to align with the platform token of Binance (8.2→market cap of $9.2 billion);
- Long-term (18 months+): If the 55% revenue growth rate is maintained, it is expected to hit a market cap of $100 billion by 2026, becoming a core component of the Web3 financial infrastructure.
In the era when the boundaries between traditional CEX and DEX are increasingly blurred, Hyperliquid has demonstrated the possibility of a new path - through the native performance of the blockchain, it has achieved a paradigm revolution in financial efficiency. When the market is still using the DEX valuation framework to view HYPE, its essence has already become a new species that integrates the efficiency of CEX, the transparency of DEX, and the scalability of L1, which is the core logic of its value revaluation.
