What's All The $HYPE About?

Written by Jason Krutzky, Chartered Meme Technician at Spot Trading.

Howdy Gang,

In trading, regardless of the asset type, there are generally two things that cause the price to go up. Hype and profits. 

In memes, hype is the driver. Value is measured in virality. Shares, streams, mentions, attention. These are the things that can send prices soaring. And as a deep lover of culture, this is the world I tend to focus on because I understand it.

The other world, that of proper businesses with real revenues, mass user adoption, and moats that drive retention and value, has always kind of alluded me.

Reading balance sheets? Hard pass. Monitoring daily revenues? Gross.

This stuff just does not click with my brain the same way that a viral meme does.

But with the sheer amount of scams and rugs in memes, I know that I'm doing myself a disservice by not stepping out of my comfort zone and exploring the legitimate businesses that are being built in this space. 

So, today, I'm going to dig into a product that Nicky has been on my ass to cover since I started writing this newsletter. I'm talking about Hyperliquid ($HYPE).

What's All The $HYPE About?

At its core, Hyperliquid is a decentralized perps exchange. Simply, it’s a platform where traders can bet, with up to 50x leverage, on the future prices of over 130+ crypto assets without having to own them directly.

In the degenerate economy we currently find ourselves occupying, there is obviously an insatiable desire for risk, and Hyperliquid has carved out a dominant position in the space for a few key reasons:

• It’s Incredibly Fast: Built on its own custom blockchain, Hyperliquid processes trades with the speed of a centralized exchange like Binance or Coinbase, but with the self-custody benefits of DeFi. 

• It Lists What People Want to Trade: Hyperliquid has become the go-to venue for trading perps of new and trending memes, alts, and majors with leverage. 

• It’s a Revenue Machine: Every trade on the platform generates a fee, and those fees go towards buybacks. With daily trading volumes often in the tens of billions, these fees add up to serious numbers. 

• It's The Ultimate Flywheel: Hyperliquid has a mechanism that directs 97% of all trading fees generated by the exchange to buying and burning the native $HYPE token. It functions as a core component of the exchange's tokenomics, designed to decrease the supply of $HYPE and drive its value. 

How Much Money Is Hyperliquid Making?

If a big piece of the bull thesis for Hyperliquid is the buyback mechanism, it serves us to understand how much money the platform is generating. Here are the most up-to-date stats.

As you can see, Hyperliquid is generating millions of dollars per day in revenue and fees, and the numbers have been on a steady incline for months. 

Just 11 days ago, on August 14th, it saw its biggest revenue day ever, raking in over $7.4m. Seems like a lot, but is it?

My first thought was to see how these numbers stack up against the competition. I pulled Coinbase's numbers from Q2 this year - they did $1.5b in revenue, which works out to about $16.5m per day.

So Hyperliquid's best day ever is not quite half of what Coinbase does on an average day. Doesn't sound that impressive until you consider the user base.

A quick check shows that Coinbase currently has ~120 million users worldwide, while Hyperliquid has just 650k.

Think about that. Coinbase has over 180x more users but only 2x the daily revenue on Hyperliquid's best day. That's wild.

Then there's this stat, which compares the recent total trading volume on Hyperliquid vs. Robinhood. For measure, Robinhood has approximately 13.5 million monthly active users, and still, Hyperliquid has been outpacing them. 

Seems to me that if Hyperliquid can scale its user base to even a fraction of Coinbase or Robinhood's size, its revenues would absolutely skyrocket.

So then the question is: How does it scale its user base? 

I think the simplest way is through educating about the buyback program, the Assistance Fund.

The Assistance Fund

The Assistance Fund is like an automated buying machine for $HYPE tokens. It's a smart contract that runs 24/7 without human intervention.

First, it collects 97% of all trading fees. Then, it takes this money and continuously buys $HYPE tokens from the open market. Once bought, these tokens are then burned. 

As of recent reports, The Assistance Fund has removed approximately $795m (~$2.6m/day) worth of $HYPE tokens from the total supply. This represents about 29m tokens, or about 8.7% of the circulating supply, since the program started. 

In essence, the Assistance Fund turns every trader on the platform into an indirect buyer of $HYPE tokens, whether they realize it or not.

It's the ultimate flywheel, and feels very much like another company I covered some time ago, Graphite Protocol. 

There's just one major problem that I see...

The Elephant In The Room

Hyperliquid isn't currently available to US users. That's a huge hurdle.

This blocks access to an entire population of sophisticated traders, speculators, and degens. Why hasn't this changed? Well, of course, because of regulations around perps trading in the US, but I think there's more to it.

In fact, I think it's because Hyperliquid represents an existential threat to established players like Coinbase, who have Trump's ear and will fight to protect market share.

Sure, US users can access it via VPN, but that extra friction keeps many away (myself included). This accessibility issue is likely the biggest factor limiting user growth.

What Else Could Go Wrong?

Aside from the lack of US users, let's be real about some of the other potential risks:

• Regulatory Crackdown: If the US decides to get more aggressive with offshore DeFi platforms, Hyperliquid could face serious headwinds. We've seen how quickly regulatory sentiment can shift.

• Big Tech Competition: Coinbase, Binance, or other major players could launch competing products with better US access and massive marketing budgets. They have resources Hyperliquid can't match.

• Market Dependency: Trading volumes—and thus fee revenue—are directly tied to crypto market volatility. A prolonged bear market could crater those impressive daily numbers we just lauded.

The bull case is strong, but these aren't small risks, and they should be considered before getting involved in $HYPE.

The Bottom Line

Look, the risks mentioned above are real and shouldn't be ignored. But you know as well as I do that every high-potential opportunity comes with the chance of significant downside.

The question, then, isn't whether Hyperliquid faces challenges (it does), but whether the opportunity outweighs them.

From what I can tell, it certainly seems like it does, at least right now. 

If you believe they can navigate the regulatory landscape, fend off competition, and maintain growth even through market downturns, then the upside potential is massive.

In this light, I think you have to be long some $HYPE, or at least looking for an entry at a level that suits your risk tolerance.

And lucky for you, Spot is one of the only places you can get it. 

Buy $HYPE