Research Summary
The report provides an in-depth analysis of Hyperliquid (HL), a Layer 1 blockchain that has gained significant attention since its point program launch in November 2023. The report explores HL’s performance, its unique strategies, and its potential for future growth in the decentralized exchange (DEX) market.
Key Takeaways
Hyperliquid’s Unique Positioning
- Layer 1 Blockchain: HL is not just a DEX but a Layer 1 blockchain based on Cosmos Tendermint consensus. It has its custom consensus mechanism, Hyper BFT, which optimizes its stack and reduces latency.
- Impressive Performance: HL boasts an impressive performance, reaching about 20k Transactions per second. It aims to create an on-chain ecosystem where others can build decentralized applications (dApps) without compromising performance or user experience.
Hyperliquid’s Successful Incentive Program
- Point Program: HL’s point program has been successful in attracting and retaining users. It ran for six months from November 2023 until April 2024, distributing 1 million points weekly. The program evolved to incentivize different aspects of HL, initially focusing on perpetual volume but later shifting towards spot volume.
- No VC Funds: HL bootstrapped its product without VC funds, which allowed them to distribute a higher percentage of tokens to the community and boost the attractiveness of the HL Point Program.
Hyperliquid’s Product Suite
- Pre-launch Tokens: HL offers pre-launch tokens, which have proven to be successful in attracting volume due to high interest and mindshare of tokens right before launch.
- HL Tokens: HL tokens have managed to become a new narrative with a very loyal following. They are enabled by the HIP-1 and HIP-2 standards, which allow spot order books between HIP-1 tokens and democratize how HIP-1 tokens bootstrap liquidity at launch.
Hyperliquid’s Future Growth
- Increasing DEX/CEX Volume: As users continue to move from centralized to decentralized exchanges, HL is well-positioned as a suitable alternative. The report suggests that HL’s vision of becoming a one-L1-captures-them-all fits very nicely within this trend.
- Post-Airdrop Growth: The report questions whether HL will be able to sustain its growth post-airdrop, which will be a significant determinant of its future success.
Actionable Insights
- Monitor Hyperliquid’s Post-Airdrop Performance: Investors and market watchers should closely monitor HL’s performance post-airdrop to assess its sustainability and future growth potential.
- Research the Potential of HL’s Product Suite: HL’s unique product suite, including pre-launch tokens and HL tokens, offers a unique value proposition in the DEX market. Stakeholders should explore these offerings for potential opportunities.
- Consider the Impact of No VC Funding: HL’s decision to bootstrap without VC funding has allowed for unique tokenomics and a successful incentive program. This strategy could serve as a model for other projects seeking to attract and retain a loyal user base.
