Hyperliquid’s Layer 1: A New Era for On-Chain Trading

Key Takeaways

• Hyperliquid is a high-performance decentralised exchange (DEX) built on its own Layer 1 blockchain, offering a fully on-chain order book with fast transactions and no gas fees for traders.
• It differentiates itself from other Layer 1s with its fully on-chain order book and gas-free trading, making it an efficient platform for decentralised perpetual contracts.
• The HYPE token was fairly launched, with no venture capital (VC) funding or pre-mine, ensuring wider distribution among users compared to VC-backed projects.

What is Hyperliquid

Hyperliquid is a next-generation decentralised exchange (DEX) and Layer 1 blockchain designed to provide high-speed, low-cost, and transparent trading. Unlike most DEXs that operate on Ethereum or other Layer 1s, Hyperliquid builds its own infrastructure, allowing for better scalability and customisation.

The platform is optimised for perpetual contracts, featuring a fully on-chain order book, which offers efficient trade execution while maintaining decentralisation.

Additionally, Hyperliquid enables cross-chain interoperability, allowing deposits from over 30 blockchains, including Ethereum, Solana, and Base. This broadens accessibility and liquidity, making it one of the most attractive decentralised trading platforms.

Hyperliquids succinct mission statement

What Makes It Different to Other L1s

Hyperliquid stands out in the Layer 1 space due to its unique approach to decentralised trading. Here’s how it differs from other L1s:

• Fully On-Chain Order Book
  Unlike most decentralised trading platforms that rely on automated market makers (AMMs), Hyperliquid runs an order book model entirely on-chain. This improves price accuracy, reduces slippage, and allows for more precise trading strategies.
• No Gas Fees for Traders
  A major barrier for traders on decentralised platforms is gas fees. Hyperliquid removes this burden by covering transaction costs, ensuring a frictionless experience for active users.
• Cross-Chain Deposits
  Unlike most Layer 1s, Hyperliquid supports direct deposits from multiple chains, including Ethereum, Solana, and Base, making it more accessible and liquid compared to other trading-focused Layer 1s.

By integrating these features, Hyperliquid offers a significant evolution in decentralised trading, making it a compelling alternative to existing Layer 1s and derivatives DEXs.

Hyperliquid letting X users know about its success.

The Fair Launch of the Token

Hyperliquid’s HYPE token was launched through a fair launch model, setting it apart from many Layer 1 projects that rely on venture capital (VC) funding.

Key Aspects of the Fair Launch

• No Pre-Mine or Private Sales – Ensuring an equal opportunity for all participants.
• Airdrops and Ecosystem Incentives – Instead of VC allocations, tokens were distributed to active traders and early adopters.
• Community-Driven Growth – Without VC control, the user base directly influences governance and network growth.

This model aligns incentives with the broader community, ensuring that Hyperliquid’s growth benefits its users, not just institutional investors. The Fair Launch has proven a success price-wise as the price has surged and maintained its value post-airdrop. This breaks the trend of new project releases, which usually see a large drop in value post-launch.

HYPE token has gone up in value post-launch

The Competition

Perpetual Trading

Hyperliquid faces direct competition from dYdX and GMX, two of the most established decentralised perpetual trading platforms.

dYdX, originally launched on Ethereum, has now transitioned to its own Cosmos-based Layer 1, offering deep liquidity and a robust trading infrastructure. It has a strong user base and continues to dominate decentralised derivatives trading.

GMX, built on Arbitrum and Avalanche, takes a different approach by using a liquidity provider model rather than an order book system. This model has proven successful, attracting a dedicated DeFi trading community.

Both platforms have established liquidity and branding, making them formidable competitors to Hyperliquid’s growing ecosystem. What they lack is the new project momentum that Hyperliquid has, which could give it an edge in attracting fresh liquidity, traders, and developers.

Hyperliquids focussed protocol TVL comparison

L1 Competition

Hyperliquid competes with general-purpose Layer 1 blockchains like Ethereum, Solana, and SUI, which provide infrastructure for a wide range of decentralised applications, including trading platforms. Unlike these multi-purpose blockchains, Hyperliquid has a dedicated use case—a decentralised perpetual trading exchange—which sets it apart in the Layer 1 landscape.

Despite this focus, Hyperliquid has plans to expand into a multi-purpose Layer 1, competing directly with these established chains. While this could broaden its ecosystem, it also raises questions about whether diversification is the best approach. Some argue that focusing on its unique trading niche may be more beneficial than trying to compete in multiple sectors.

Conclusion

Hyperliquid represents a major evolution in decentralised derivatives trading, improving efficiency, execution speed, and user accessibility within the DeFi ecosystem. Its fully on-chain order book and zero-gas trading model position it as a strong alternative to dYdX, GMX, and Solana-based DeFi platforms.

The fair launch of the HYPE token has further strengthened community support, making Hyperliquid one of the few Layer 1s built for traders, by traders.

If Hyperliquid can maintain its momentum and continue innovating, it could emerge as one of the leading decentralised trading platforms in the industry. However, its decision to expand into broader Layer 1 functionalities could either propel it to new heights or dilute its niche advantage—something the market will ultimately decide.