Hyperliquid (ETH): Navigating Market Sentiment and Exchange Dominance in the Crypto Derivatives Wars

The crypto derivatives market in 2025 has become a battleground for innovation, scalability, and user retention, with Hyperliquid (HYPE) emerging as a central player. Despite a 20% drop in trading volume share to competitors like Lighter, Aster, and EdgeX, Hyperliquid's structural advantages-rooted in its custom Layer 1 blockchain and HyperBFT consensus mechanism-continue to underpin its dominance in open interest (OI) and institutional confidence. This article dissects the latest on-chain data, institutional commentary, and competitive dynamics to assess Hyperliquid's position in Q4 2025 and its potential for sustained growth.

On-Chain Activity: Volatility, Burn Events, and Fee Innovations

Hyperliquid's on-chain activity in late November 2025 revealed a mix of volatility and strategic moves to bolster token value. The HYPE token fluctuated between $41.28 and $27.43 over the past week, driven by whale accumulation and a $340 million buyback program. The Hyperliquid Foundation further signaled bullish intent by burning 37.11 million HYPE tokens (3.71% of total supply) from its assistance fund, a move that aligns with its broader strategy to reduce circulating supply and stabilize price.

The platform also launched HIP-3 Growth Mode, slashing trading fees by at least 90% for new markets to incentivize liquidity provision. This initiative, combined with the recent activation of optional growth mode on November 24, aims to counter declining user engagement. However, the 7-day trading volume data tells a nuanced story: while Hyperliquid recorded $570 million in 24-hour volume on November 26, this marked a 4.10% decline from the previous day, reflecting broader market uncertainty.

User Growth and Competitive Pressures

Hyperliquid's user base has grown exponentially, expanding from 291,000 addresses in early 2025 to over 600,000 by November. A recent airdrop added 170,000 new users, while daily active traders surged from 5,000 to 30,000. Yet, this growth has not translated into sustained volume dominance. Competitors like Lighter (27.7% volume share) and Aster (19.3%) have capitalized on Hyperliquid's strategic pivot to a B2B model, prioritizing infrastructure development over direct user acquisition.

The platform's 63% OI share across major perp venues remains a critical differentiator. Unlike volume, which can be incentivized, OI reflects committed capital-traders leaving positions open overnight. This metric underscores Hyperliquid's reliability, as evidenced by its flawless performance during the October 2025 liquidation event. However, the 21.97% decline in active contract addresses from early November to December 15 suggests waning short-term engagement, a challenge the platform must address to retain its edge.

Institutional Confidence and Long-Term Valuation Potential

Institutional analysis paints a cautiously optimistic picture. Cantor Fitzgerald projects a $200 billion market cap for HYPE by 2035, based on a 50x P/E ratio applied to potential $5 billion in annual fees. This valuation hinges on Hyperliquid's ability to capture market share from centralized exchanges, where perpetual futures volumes exceeded $60 trillion in 2025. The platform's recent SEC product filing and regulated ETP listing on the SIX Swiss Exchange further validate its institutional appeal.

Yet, challenges persist. The reassignment of the MON ticker from Pixelmon to Monad in late November raised concerns about decentralization, while token burn data for the critical 7-day period remains opaque. These issues highlight the need for transparent governance to maintain trust in a competitive landscape where user sentiment can shift rapidly.

The Road Ahead: Innovation vs. Competition

Hyperliquid's long-term prospects depend on its ability to balance innovation with user retention. The HyperEVM component, with a TVL of $2.08 billion, demonstrates the platform's potential to expand beyond derivatives into broader DeFi. Meanwhile, HIP-3 and Builder Codes are positioned to transform Hyperliquid into a "core hub for global finance," a vision that could attract institutional and retail capital alike.

However, the platform must contend with aggressive competition. Lighter and Aster's vertically integrated strategies have allowed them to launch new products faster than Hyperliquid's B2B-focused approach. To reclaim volume share, Hyperliquid may need to reintroduce user-centric incentives while leveraging its technical superiority in sub-second order finality and 200,000 TPS throughput.

Conclusion: A Platform with Structural Strengths

Hyperliquid's dominance in OI and institutional recognition underscore its foundational strengths, even as volume share erodes. The recent burn events and fee innovations signal a commitment to token value, while its HyperBFT consensus mechanism ensures scalability. For investors, the key question is whether Hyperliquid can adapt its B2B strategy to retain retail users without compromising its infrastructure vision. If the platform successfully navigates these challenges, its long-term growth potential-bolstered by Cantor Fitzgerald's $200 billion projection-remains compelling.