Why HYPE Outperformed Most L1s in 2025: Liquidity, Supply Stability, and Institutional Demand

In 2025, the crypto market entered a bearish phase marked by macroeconomic uncertainty, regulatory shifts, and a 20% decline in total crypto value since October's peak. Amid this downturn, Hyperliquid's native token, HYPE, defied broader trends, outperforming most Layer-1 (L1) blockchains. This resilience stems from three critical factors: unparalleled liquidity metrics, robust supply stability mechanisms, and institutional-grade demand drivers. These elements, combined with selective capital flows favoring infrastructure with proven utility, positioned HYPE as a standout performer in a bearish L1 market.

Liquidity: The Cornerstone of HYPE's Dominance

Hyperliquid's liquidity metrics in 2025 set a new benchmark for decentralized perpetual contract exchanges (Perp DEXs). By mid-2025, the platform accounted for 73% of the decentralized Perp DEX market share, with an open interest of $15 billion and weekly trading volumes averaging $47 billion. These figures far exceeded those of competitors like Aster, Lighter, and EdgeX, which collectively held just 36.9% of total open interest. Hyperliquid's infrastructure-featuring a custom-built Layer 1 blockchain with 200,000 orders per second capacity and a fully on-chain order book (CLOB)-enabled it to rival centralized exchanges in execution speed and depth.

Notably, Hyperliquid's liquidity proved resilient during high-stress events. For instance, in October 2025, the platform handled $19 billion in liquidations without downtime, maintaining perfect uptime. This reliability attracted traders seeking stability, even as broader markets faltered. By year-end, Hyperliquid captured 6.1% of centralized exchange trading volume and 17.8% of CEX open interest, signaling a shift in capital toward decentralized platforms with institutional-grade infrastructure.

Supply Stability: Navigating Bearish Pressures

HYPE's supply dynamics in 2025 were shaped by strategic mechanisms that mitigated bearish pressures. A $60 million team token unlock in November 2025 released 1.75 million HYPE tokens, but only 23.4% were sold OTC, with ~40% re-staked, limiting immediate sell pressure according to market analysis. Additionally, Hyperliquid's deflationary buybacks and the HIP-3 upgrade-allowing community governance over perpetual markets-enhanced token utility and scarcity according to financial research. These measures countered the typical bear market sell-offs seen in other L1s, where token holders often liquidate assets to meet margin calls or cover losses.

The platform's Hyperliquidity Provider (HLP) program further stabilized supply by offering liquidity providers an average annualized return of 11% in 2025. Despite security incidents like the $4.9 million POPCAT attack in March, the HLP program retained institutional interest, underscoring confidence in Hyperliquid's risk management and governance frameworks according to developer reports.

Institutional Demand: A Magnet for Selective Capital

Institutional adoption of HYPE in 2025 was driven by strategic partnerships and infrastructure advantages. Hyperliquid's collaboration with JPMorgan on a structured BTC product highlighted its appeal to traditional finance players. Meanwhile, the EVM Cross-Layer Composability upgrade in August 2025 enabled seamless integration with Ethereum-based DeFi protocols, unlocking cross-layer strategies for institutional investors.

The HLP program also attracted capital by offering non-directional exposure to decentralized trading, with net profits rising from $50 million to $68 million in the first half of 2025. This performance, coupled with Hyperliquid's 21.2% share of total crypto spot trading volume in October 2025, made it a preferred venue for institutional capital seeking yield in a bearish environment. Selective capital flows, particularly from whale investors and private credit funds, further amplified HYPE's institutional demand, as evidenced by its TVL growth from $2.1 billion to $3.5 billion according to market data.

Selective Capital Flows in a Bearish L1 Market

While the 2025 bear market saw widespread selling and a 32% MoM decline in BNB Chain transactions, capital flowed toward assets with defensible utility and infrastructure. Hyperliquid's dominance in decentralized perpetual trading-capturing 75% of the market share and generating $95.63 million in 30-day revenue-made it a magnet for selective capital. Institutions prioritized HYPE over other L1s due to its ability to maintain tight spreads, minimal slippage, and resilience during volatility according to market analysis.

This trend was further reinforced by macroeconomic factors. As Bitcoin ETFs stabilized with a $220 billion in inflows, investors sought assets with strong institutional backing. Hyperliquid's $888 million Hyperliquid Strategies treasury and its alignment with regulated financial products positioned it as a bridge between DeFi and traditional markets according to market reports.

Conclusion: A Blueprint for Resilience

HYPE's outperformance in 2025 underscores the importance of liquidity, supply stability, and institutional demand in navigating bearish L1 markets. By combining a high-performance CLOB model, strategic tokenomics, and institutional-grade infrastructure, Hyperliquid attracted selective capital flows that insulated it from broader market declines. As the crypto landscape matures, projects that prioritize utility over speculation-like Hyperliquid-are likely to define the next phase of growth.