HYPE Token Surges 80% as Hyperliquid Dominates Perpetual Futures Market

HYPE, the native token of Hyperliquid, has seen a significant surge in value, rising by 80% over the past month to reach $37.72. This surge is attributed to the growing popularity of Hyperliquid’s perpetual futures offering, which has attracted a large number of traders to the decentralized exchange.

Hyperliquid’s HyperCore product generated 80% of all on-chain perpetual futures trading volume in May, highlighting the platform’s dominance in this market. This success has been driven by the platform’s massive airdrop last year, which distributed 310 million HYPE tokens to early users. The airdrop, initially valued around $1.6 billion, would be worth $11.7 billion today based on current prices.

Despite the success, Hyperliquid has faced criticism for decisions that some argue go against the permissionless ethos of decentralized finance (DeFi). For instance, the platform coordinated an effort to delist a surging meme coin, which could have caused some users losses. Additionally, the platform’s low validator count has raised concerns among critics.

However, Messari Research Analyst Matthew Nay believes that Hyperliquid has been able to build a strong and sustainable community. He attributes this to the wealth effect created by the airdrop, which has fostered a tight-knit community built around good technology. Nay also notes that the service appeals to speculative, leveraged long traders, a demographic that is prevalent in the crypto community.

Hyperliquid’s success in the perpetual futures market is notable, as this market has traditionally been dominated by centralized exchanges. Although Hyperliquid’s services are not available in the U.S., the platform is increasingly competing with centralized derivative exchanges like Binance and Bybit.

Perpetual futures contracts allow traders to speculate on an underlying asset’s price movements without a fixed expiry date, as long as the proper margin requirements are maintained. These contracts often support high amounts of leverage, amplifying potential returns but also increasing the risk of losing margin that serves as collateral for borrowed funds. Hyperliquid leverages smart contracts to make the service’s plumbing transparent, appealing to crypto-native traders.

In recent weeks, activity on Hyperliquid has garnered significant attention, particularly due to highly leveraged bets made by the pseudonymous trader James Wynn. Although Wynn once commanded a $1 billion Bitcoin bet, he was recently liquidated, losing $100 million. This event has further engaged the community, although the associated post on X, formerly Twitter, has since been deleted.