HyperCore is the trading engine and handles order matching, remittances, and risk management.
Hyperliquid controls over 20% of the market share of decentralized crypto perps trading. According to data from Defillama, over $7.5 billion worth of crypto perpetual contracts are traded on the platform daily. It leads other popular perps trading protocols by a significant margin on key usage metrics and serves over 1.4 million crypto perps traders, according to a Yahoo Finance report.
Put simply, Hyperliquid is one of the largest crypto perp dex platforms and this article presents a comprehensive review of how it works and how to use it.
Hyperliquid is a non-custodial decentralized crypto trading platform that allows investors to trade crypto perpetual contracts without giving up custody of their funds or creating an exchange account. It supports perpetual trading for over 100 crypto assets with up to 50X leverage.
Hyperliquid combines the CEX experience with DEX security and houses an ecosystem of applications that are tailored for decentralized crypto trading and routine finance. The platform was launched in 2023 and has grown into one of the biggest decentralized crypto perps trading protocols.
Here are the core components of the Hyperliquid trading platform
Hyperliquid Blockchain (HyperEVM)
HyperEVM is a high-performance EVM-compatible Layer-1 blockchain network designed to power DeFi dApps in the Hyperliquid ecosystem. HyperEVM is built for cost-efficiency and instant transaction execution as key ingredients of a functional Perps trading platform.
It runs on the HyperBFT consensus, a high-throughput consensus algorithm designed to provide instant finality for financial applications like high-frequency trading.
Hyperliquid Perps Trading Protocol (Hypercore)
HyperCore is Hyperliquid’s trading engine. It is also secured by the HyperBFT consensus algorithm and oversees the core trading operations on the protocols. HyperCore handles order matching, remittances, staking, vaults, and risk management procedures like liquidation.
According to Hyperliquid, Hypercore is able to process up to 200,000 transactions per second.
On-chain Order Book
Hyperliquid operates a CEX-style order system. The orderbook is similar to that of centralized exchanges. The order-matching executes orders with time and price priority, that is, orders with the same price are matched in a first-come, first-served manner.
Hype Token
Hype is the native token of the HyperEVM and the Hyperliquid ecosystem. Holders and validators can stake it on the network, where it serves economic-security utility. In addition, Hype is also used to govern the protocol through the HypeDAO.
Hyperliquid is a constituted trading platform. Its interface, matching technology, and efficiency are similar to those seen on centralized perps trading platforms. It is, therefore, a good fit for professional and mid-level traders.
Anyone with a good understanding of Perps trading and a basic understanding of blockchain operations can comfortably use Hyperliquid. However, newbies may find the core features confusing at first.
Therefore, like perps trading itself, Hyperliquid may be complicated for first-time users. In any case, it is important to gain a basic understanding of the platform before you start trading
HyperEVM inherits blockchain-level security, while HyperCore is built to operate dynamically with the rest of the system to ensure seamless trading. The Hyperliquid platform has not reported any significant security breach since it launched. Still, it is advised that you disconnect your wallet after using the platform and revoke approvals to avoid indirect no-limit approval exploits.
Regarding legitimacy, Hyperliquid is a legitimate crypto perp trading protocol. The platform is available globally except for countries where usage is restricted, like the United States, the UK, Ontario (Canada), and Belgium.
Here are some things to consider before you start using Hyperliquid;
Conversance with Blockchain operations
Hyperliquid reduces the complexity of blockchain-end operations on its platform. However, that still leaves a significant number of operations that require knowledge of the blockchain and DeFi protocols. Therefore, before you start trading on Hyperliquid, ensure that you are conversant with blockchain-related operations like wallet signing and crypto transfers.
Asset You Wish to Trade
Hyperliquid supports over 100 crypto assets. While this is a good coverage of the crypto market, several assets are not tradable on the platform. As such, ensure that the asset whose contract you wish to trade is supported on the platform before you deposit.
Liquidity
Liquidity on decentralized perps trading platforms is relatively lower than top-tier centralized exchanges like Binance and Bybit. While trading low-liquidity pairs on Hyperliquid, you may experience higher slippage. This is important to consider as it has an impact on your profitability.
Regional Restrictions
Hyperliquid is not legally accessible in the United States, the UK, Ontario (Canada), and Belgium. If you are in any of these regions, you may explore alternatives to Hyperliquid or possible work-throughs.
Level of Leverage
Hyperliquid offers a maximum of 50X leverage. For risk-savvy traders who wish to use higher leverage, this may be a caveat.
To start trading crypto perps on Hyperliquid
1. Visit the Hyperliquid platform and connect your crypto wallet
2. Click Deposit in the Top corner and proceed to fund your trading account.
3. Select the asset you wish to deposit and enter a desired amount. Click Deposit to complete.
4. Click Enable Trading to approve the protocol to use your funds.
Once done, you can now start trading on Hyperliquid
Use the trading panel to set your trades as desired. Review your order before you confirm a position.
Overall, Hyperliquid is a good platform for trading crypto perps. It does a nice job of abstracting some blockchain-related operations. This allows users to focus on trading rather than learning blockchain operations.
The gasless transaction also makes for cost-effectiveness, while HyperEVM’s high throughput ensures that users’ trades are executed instantly. The platform is solidly engineered and has so far not reported any fatal security breaches.
We’d rate the platform 9/10 in terms of usability. Fees are also cheap, compared to charges on centralized Perps trading platforms and other decentralized crypto-perps exchanges.
Hyperliquid decentralizes Perps trading and opens financial opportunities to everyone who understands Perps trading. By not gate-keeping the Perps market through centralization, it also scales blockchain adoption for finance.
Hyperliquid effectively implements blockchain technology and decentralized protocols to create a platform for seamless crypto-perpetual trading. In the future, we may see improvements to the network’s throughput and the protocol’s cost efficiency. Hyperliquid’s technology stack can also be applied at both the micro and macro levels to mainstream financial setups to create sovereign trading platforms for commodities.
Having said this, it is recommended that you understand the basis of how the platform works and apply safety precautions to avoid loss of funds to erroneous transactions. Also, note that leverage trading carries significant risk. Always, thread below your risk-tolerance levels.
Disclaimer: This article is an independent review of the Hyperliquid platform. It only educates readers and does not offer financial advice. Featured project(s) are not endorsed. Note that crypto investments carry significant risks.
