In May 2025, the HIP-3 improvement proposal launched by Hyperliquid has attracted widespread attention in the DeFi field, and the Minimum Viable Product (MVP) has been launched on the testnet. This is not just a simple protocol upgrade, but a key step in Hyperliquid's development blueprint that may have far-reaching implications for the future of on-chain derivatives trading.
To truly understand the importance of HIP-3, we need to first understand Hyperliquid's overall design philosophy, starting with its three core proposals (HIPs).
Hyperliquid Trilogy
Hyperliquid's development path is clear and coherent, building a progressively functional financial ecosystem through three key improvement proposals.
HIP-1: Breaking the Listing Barriers of CEX
Industry Pain Point: For a long time, new project parties have faced a common challenge: the process of listing on mainstream CEX is opaque, costly, and often accompanied by harsh terms. Project parties need to go through lengthy negotiations and may need to pay high fees or give up a large number of tokens.
Solution: HIP-1 provides another option for crypto project teams. It allows anyone to create new tokens on Hyperliquid without permission, just like the ERC-20 standard. Project teams only need to pay a certain fee (paid in HYPE tokens) to create their own token and automatically open a spot order book market. This greatly lowers the threshold for assets to enter the open market, providing project parties with a fairer and more transparent issuance platform.
HIP-2: Automated Market Making for Spot Markets
Industry Pain Point: Even if a new token is successfully listed, if no one pays attention and lacks trading depth, its value cannot be reflected. This is the so-called "liquidity cold start" problem.
Solution: HIP-2, also known as "Hyperliquidity", is Hyperliquid protocol's native automated liquidity strategy. After a new token is created through HIP-1, HIP-2 acts as a market-making robot, automatically placing buy and sell orders on the order book, providing basic tradable liquidity for this new market. It effectively solves the cold start problem of newly listed assets.
HIP-3: Permissionless Perpetual Market Creation
Industry Pain Point: Perpetual contracts are the most traded area in the crypto market, but before HIP-3, only the Hyperliquid core team had the right to decide which asset perpetual contracts to list, limiting the platform's development potential and asset diversity.
Solution: HIP-3, also known as "Builder-Deployed Perpetuals", completely opens up the creation rights of perpetual contract markets. Any "Builder" can deploy a custom perpetual contract on Hyperliquid by staking 1 million HYPE tokens.
Builders have full control over the markets they deploy, and can independently define key parameters, including selecting collateral assets, using which price oracle, setting leverage limits and margin parameters, etc. Moreover, Builders enjoy 50% of the market's trading fees (the current figure, which may be adjusted after official launch), which is a quite substantial return.
After these three steps, Hyperliquid has transformed from a DEX purely facing end users to a "financial infrastructure layer", far surpassing other DEX competitors in narrative and deriving a new business ecosystem and gameplay.
Impact One: PMF Aligning with RWA Trend
HIP-3 has a very high entry threshold: Builders must stake 1 million HYPE tokens as a security deposit. At the current HYPE price of around $42, this staking amount is about $42 million. This design is actually a screening mechanism to ensure that only capital-rich, serious players have the ability to participate.
Institutional capital is certainly a qualified player. These institutions will not spend millions of dollars to list some small-cap, rapidly declining meme coins. They will target markets with huge and stable trading volumes in traditional finance, which is where RWA comes into play. Major global stock indices (such as S&P 500), commodities (such as gold), and major foreign exchange currency pairs (such as EUR/USD) are all potential targets.
Taking the world's most important S&P 500 index futures contract as an example. The CME E-mini S&P 500 futures (code: ES) have a daily contract volume of about 1.6 million in 2025. Each contract's nominal value is $50 multiplied by the day's index points. The E-mini S&P 500 futures price in July 2025 is around $6,400 per point, so each contract's nominal value is approximately $320,000 (6,400 × 50). Calculated this way, the daily total nominal amount of S&P 500 futures is:1,600,000 contracts × $320,000/contract ≈ $51.2 billion.
If a perpetual contract for the S&P 500 index is deployed on Hyperliquid, even capturing just 0.1% of CME's trading volume, and assuming a 0.1% fee rate, the market's daily fees would reach$51.2 billion × 0.1% × 0.1% = $512,000, and Builders can share 50% of these fees, which means Builders' daily income is $256,000.It would take about 164 days to recover the $42 million staking cost, after which it would be pure profit. For institutions seeking stable returns, the attraction is undoubtedly huge.
Moreover, before HIP-3, Hyperliquid, like many DeFi protocols, was tailored for Crypto Native assets, and its architecture and parameters might not be suitable for RWA assets. With the introduction of HIP-3, Hyperliquid's core engine provides unified trading and settlement capabilities, while each RWA market has risk parameters, pledged assets, and liquidation logic customized for specific assets (such as US Treasury bonds and real estate). Thismodular design is necessary for safely and efficiently introducing different RWA on-chain, and is "strikingly similar" to Aave V4's Hub+Spoke architecture and Sky's Core+SubDAO architecture.
Impact Two: Creating a New Token Ecosystem
Although HIP-3 is good, there are two problems that have not been solved:
After creating a perpetual contract market, one can enjoy 50% of the fee sharing, which is a very attractive return. However, the initial investment is huge, and the 1 million HYPE staking cost excludes most retail investors. Do retail investors have no way at all?
HIP-3 is somewhat similar to HIP-1, just decentralizing the right to create trading markets, but where does the liquidity for this new market come from? HIP-2 solved the cold start liquidity problem for HIP-1,but who will provide initial liquidity for HIP-3?
For the above two issues, although HIP-3 is currently in the testnet stage and may have better solutions in the future, the author believes that even if Hyperliquid does not provide an official solution after official launch, the community can use the "composability" of DeFi protocols to provide third-party solutions.
Suppose the community invents a new DeFi protocol, HLAggregator, solving the 1 million HYPE staking challenge. HLAggregator allows retail investors to deposit their HYPE tokens into a public pool, crowdfunding to gather 1 million HYPE and thus qualify for deploying perpetual contracts. In return, users will receive a staking certificate representing their share (LST), thereby gaining the right to share future fee income from that contract market. This allows ordinary users to participate in HIP-3's returns.
Besides LST, HLAggregator will also issue its own governance token, called HLA. When deciding which token's perpetual contract market to establish with the crowdfunded HYPE, owning more HLA means having greater influence. To this end, project teams wanting to create a perpetual contract market for their token on Hyperliquid will "bribe" HLA holders, such as conducting airdrops for HLA holders, thereby giving HLA greater demand and boosting its token price.
As a result,the liquidity challenge of new contract markets can be solved. HLAggregator can incentivize users to provide initial liquidity for new markets through "token incentives" by distributing its own project token HLA or collaborating with projects seeking to launch perpetual contracts to distribute their tokens.
As HLAggregator succeeds, other teams follow up by developing other "liquidity aggregators", triggering a "Hyperliquid war" competing for user HYPE deposits, project collaborations, and real yield distribution rights. Readers familiar with DeFi history will recognize this as a replay of the "Curve war".
In essence, staking 1 million HYPE to cause deflation is just the first step, with the second step being the birth of new ecosystems and business models around HYPE. Through these two steps, HYPE's application scenarios and market demand will be greatly expanded, thereby establishing a solid support for HYPE's token price.
Impact Three: Satisfying Pre-IPO Trading Demand
Recently, retail investors have shown increasing interest in private stocks of unlisted companies (Pre-IPO). Star companies like OpenAI and SpaceX have not yet gone public, but many people want to "get in early". Robinhood once issued a small number of tokenized stocks for OpenAI and SpaceX, which, despite causing significant controversy, proved the market's strong investment demand for Pre-IPO stocks.
Hyperliquid has a natural advantage in meeting this market demand. First, Hyperliquid has a cool feature calledHyperps, which solves the problem of providing futures trading for assets not yet officially launched or lacking reliable price sources. Unlike traditional perpetual contracts that rely on external spot price oracles, Hyperps' funding rates are not calculated based on the deviation between futures and spot prices, but are calculated based on the difference between the current futures price and its own exponential moving average (EMA) over a period (e.g., 8 hours). When long sentiment is strong and futures prices are far above their moving average, funding rates become extremely high, strongly incentivizing shorts to enter, and vice versa.
The combination of HIP-3 and Hyperps allows anyone (who can pay the 1 million HYPE staking fee) to "self-service" deploy perpetual contracts for popular private stocks like OpenAI and SpaceX. HIP-3 solves the "can it be done" problem, while Hyperps solves the "price without anchor, extreme volatility" problem.
Although the futures contracts launched by HIP-3+Hyperps are not actual stocks and thus not suitable for value investors, they still provide retail investors an opportunity to profit from price fluctuations of these companies. More importantly, this mechanism provides price discovery. When these companies truly go public, the market will already have a reference price, preventing overly ridiculous pricing that could exploit retail investors.
Impact Four: Agile Response to CEX Competition
Recently, compliant exchanges like Coinbase and Kraken have begun offering futures trading services for US users. Their biggest advantage is compliance, which strongly attracts institutional funds with high security and compliance requirements. Their disadvantage is the cautious approach to launching products, such as Coinbase currently offering contract products only for BTC and ETH, with low leverage limits (like 10x). CEX product launches require complex approval processes that may take months, making it impossible to quickly respond to market demand for new products.
CEX's weakness is Hyperliquid's strength. Even before HIP-3, Hyperliquid was already very quick in responding to market demands. For example, when the NFT market was hot, Hyperliquid launched an NFT index contract allowing traders to long or short the entire top NFT market; when SocialFi was trending, Hyperliquid also launched a friend.tech social account index that allowed direct long or short positions on top ecosystem users' Key prices. Now, HIP-3 makes creating contract markets "permissionless", further elevating market responsiveness - an agility that CEX cannot match.
Therefore, Hyperliquid's continuous innovation, introducing features like HIP-3 and Hyperps, is precisely a way to counter CEX giants' compliance advantages through its own agility, strengthening its differentiated characteristics in fierce market competition.
Conclusion: A More Open On-Chain Financial Future
In summary, HIP-3 is an important leap in Hyperliquid's development. It is not just a technical upgrade, but a strategic choice aimed at building itself into acore financial infrastructure connecting real-world assets, innovating ecosystems around HYPE, and agilely responding to market demands, driving deep integration of DeFi and TradFi.
Of course, challenges lie ahead. How to effectively guide new market liquidity and navigate the complex global regulatory environment will be key to determining its ultimate success. However, HIP-3 has already painted a picture of a more open, composable, and imaginative on-chain financial future.
