Sonnet Biotherapeutics' Strategic Shift into Crypto: A High-Conviction Bet on HYPE and Treasury Innovation

In a bold reimagining of its corporate identity, Sonnet Biotherapeutics has pivoted from biotechnology to digital asset management, transforming into Hyperliquid Strategies Inc. (HSI), a public cryptocurrency treasury company. This strategic shift, executed through a $888 million merger with Rorschach I LLC, positions HSI as a pivotal player in the Hyperliquid ecosystem, leveraging its holdings of HYPE, the native token of the Hyperliquid Layer-1 blockchain. The move reflects a high-conviction bet on the convergence of institutional-grade crypto infrastructure and tokenomics-driven value creation.

A New Business Model: From Biotech to Crypto Treasury

HSI's formation marks a departure from Sonnet's original focus on therapeutic development, such as its pipeline asset SON-1010. Instead, the company now operates as a dual-structure entity: Sonnet remains a wholly owned subsidiary to advance its biotech portfolio, while HSI oversees a $583 million HYPE token reserve and $305 million in cash, creating a diversified treasury strategy. This model mirrors the rise of publicly traded crypto treasuries, where institutional expertise in both traditional finance and digital assets drives long-term value.

The HYPE token, central to HSI's strategy, serves as the backbone of Hyperliquid's decentralized perpetual trading platform. With a capped supply of 1 billion tokens and a deflationary mechanism tied to protocol fees, HYPE's utility spans staking, governance, and trading incentives. HSI's initial holdings of 12.6 million HYPE tokens, combined with its institutional backing from Paradigm, Galaxy Digital, and Pantera Capital, underscore confidence in the token's potential to appreciate alongside Hyperliquid's growing market dominance.

Hyperliquid's Market Dominance and Tokenomics

By 2025, Hyperliquid has cemented its position as a leader in decentralized perpetual trading, capturing 73% of the perp DEX market share and 12% of Binance's trading volumes. This growth is underpinned by robust tokenomics: HYPE holders earn a 11% annualized return through staking and governance participation, while protocol fees fund buybacks, creating a flywheel effect. The platform's EVM-compatible infrastructure and HyperBFT consensus mechanism further enhance its appeal to institutional investors, with JPMorgan recently adopting Hyperliquid for structured BTC products.

HSI's role in this ecosystem is twofold. First, it acts as a major HYPE accumulator, with plans to deploy its token holdings through staking and DeFi activities to generate ongoing returns. Second, it leverages its institutional partnerships to expand Hyperliquid's reach, as seen in the HIP-3 upgrade, which allows community-driven perpetual market deployments. These initiatives align with broader trends of firms building crypto treasuries beyond Bitcoin and Ethereum, capitalizing on altcoin growth.

Institutional Adoption and Strategic Expansion

HSI's $1 billion S-1 filing with the SEC highlights its aggressive expansion plans, aiming to raise capital for additional HYPE purchases and corporate expenses. This move has already triggered a 15% rally in HYPE's price, reflecting market optimism about the company's ability to inject liquidity into the token. Institutional adoption is further bolstered by Hyperliquid's TVL, which reached $3.5 billion in 2025, driven by its high-performance infrastructure and deep liquidity pools.

The company's leadership, including CEO David Schamis and Chairman Bob Diamond, emphasizes Hyperliquid's unique value proposition: combining the speed of centralized exchanges with the transparency of decentralized finance. This hybrid model has attracted a diverse investor base, from venture capital firms to family offices, all betting on HYPE's utility and scarcity.

Risks and Skepticism: A Balanced Perspective

Despite its momentum, HSI's strategy is not without risks. Critics highlight potential selling pressure from token unlocks, such as the 1.75 million HYPE tokens released for developers in 2025. Additionally, market fragmentation and coordination challenges with other exchanges could hinder Hyperliquid's growth trajectory. However, analysts argue these risks are largely priced in, with HYPE's fundamentals-such as its 1,600% year-over-year increase in blockchain fees-suggesting resilience.

Conclusion: A High-Conviction Play on Crypto's Future

Sonnet Biotherapeutics' transformation into HSI represents a high-conviction bet on the future of institutional-grade crypto infrastructure. By anchoring its value proposition in HYPE's tokenomics, Hyperliquid's market dominance, and strategic institutional partnerships, HSI is positioned to capitalize on the altcoin boom while mitigating traditional crypto risks. While challenges remain, the company's dual focus on biotech innovation and digital asset management offers a unique value proposition for investors seeking exposure to the next phase of crypto adoption.