CoinW Research Institute

Recently, Hyperliquid has once again become the focus of market attention. On one hand, according to on-chain data, large-scale withdrawals have occurred from market-making addresses related to Wintermute and Auros Global on the Hyperliquid platform, involving amounts close to $100 million; on the other hand, traditional exchanges like CME and ICE have begun to push American regulatory bodies to focus on Hyperliquid, particularly regarding the price discovery and regulatory boundary issues brought about by perpetual contracts for traditional assets such as crude oil, stock indices, and Pre-IPO offerings.

In the past, the market's understanding of Hyperliquid centered more on its on-chain order book, exceptional trading experience, and expansion of Perp DEX market share. However, as mainstream market makers start to reduce their exposure and traditional exchanges begin to apply public pressure, the narrative surrounding Hyperliquid has changed. It is no longer just a crypto-native perpetual trading platform, but is evolving into an on-chain price discovery system that runs 24 hours a day, covering both crypto assets and traditional assets.

Below, CoinW Research Institute will analyze the liquidity pressures, growth logic, and institutional risks currently facing Hyperliquid, using the changes in addresses related to Wintermute and Auros Global as a starting point, in conjunction with Hyperliquid's current trading data and the context of CME and ICE's push for regulation. We will also explore where this on-chain perpetual giant might be headed in the future.

1. Two Major Market Makers Withdraw Funds, Hyperliquid's Liquidity Faces Testing

The core of this event stems from Hyperinsight's monitoring of Hyperliquid's institutional LP addresses. According to Lookonchain's disclosure on May 18, amidst increased market volatility, there have been synchronized large-scale withdrawals from the two major institutional liquidity provider addresses on the Hyperliquid platform, estimated to total nearly $100 million.

Among them, the Auros Global-related LP address levelled all its perpetual positions on the Hyperliquid platform in a short time and transferred approximately $6 million to Binance. Previously, this address had provided liquidity for around 175 tokens on the platform, with the liquidity volume for BTC alone reaching approximately $45 million at one point. Meanwhile, the Wintermute-related address also significantly reduced its market-making exposure on Hyperliquid. Hyperinsight compared previous data and found that its liquidity provision for BTC and ETH decreased by about 90%, from about $40 million to around $4 million.

However, it is important to note that the Wintermute and Auros Global addresses mentioned here are labels designated by third-party monitors like Hyperinsight and Lookonchain, and not officially confirmed by the two companies.

Wintermute tagged address: 0xecb63caa47c7c4e77f60f1ce858cf28dc2b82b00

Auros Global tagged address: 0x023a3d058020fb76cca98f01b3c48c8938a22355

Further data from coinglass indicates that as of May 19, the value of the perpetual account for the Wintermute tagged address was approximately $54.65 million, with a notional position of about $64.33 million, still holding 114 perpetual positions. The Auros tagged address is even more pronounced, with a notional position of 0 and an account value of about $898,000.

Source: https://www.coinglass.com/hyperliquid/0xecb63caa47c7c4e77f60f1ce858cf28dc2b82b00

Therefore, this event cannot be simply understood as "the two major market makers completely withdrawing from Hyperliquid." More accurately, the Auros tagged address is closer to exiting perpetual market-making exposure, while the Wintermute tagged address is still participating in trading, but its risk budget, inventory structure, and quote depth may have changed. This distinction is important. If both institutions were to completely exit simultaneously, it would indicate that professional market-making capital is starting to reassess the risk-reward ratio for Hyperliquid.

2. Mainstream Coin Liquidity Has Not Disappeared, But Carrying Capacity is Thinning

However, in the crypto market, the withdrawal of market makers often does not immediately reflect in the price chart and may not instantly translate into expanded bid-ask spreads. Particularly for mainstream assets like BTC and ETH, even if some institutional LPs reduce their quotes, other traders, arbitrage bots, and the platform's internal liquidity mechanisms can still maintain relatively tight first-level spreads. Therefore, users may not immediately perceive a drop in liquidity during regular trading. But this does not mean that the impact doesn't exist. Real changes often occur in market depth, impact costs, and recovery capabilities in extreme scenarios.

The role of market makers is not just to provide buy and sell quotes, but to buffer short-term inventories during unilateral market fluctuations. When significant buy or sell orders or consecutive liquidations occur, the willingness of leading market makers to place orders on both sides of the market determines whether prices can be absorbed smoothly in a short period. If this institutional capital withdraws, even if trading remains smooth during normal times, the market is more likely to experience slippage, price jumps, and chains of liquidations when under pressure.

The current trading data on the Hyperliquid platform remains impressive. According to coinglass data, as of May 19, 2026, the platform has launched 230 perpetual contract markets, with a 24-hour notional trading volume of approximately $5.2 billion and an open interest of roughly $6.26 billion. Among these, BTC, ETH, and HYPE remain the main traded varieties. On the surface, Hyperliquid still appears to be one of the most liquid perpetual contract platforms on-chain at present.

Source: https://www.coinglass.com/exchanges/Hyperliquid

However, it is important to note that the platform's total trading volume and true liquidity are not the same thing. Trading volume reflects how much trading has taken place in the market, while liquidity reflects how much trading can be carried out in the future at a low cost. The former can be magnified by volatility, leverage, and high-frequency trading, while the latter is more dependent on market makers' inventories, funding costs, and risk preferences.

Therefore, what is truly worth paying attention to regarding this withdrawal of market makers is not whether Hyperliquid's trading volume will significantly decline in the short term, but rather that its liquidity structure is changing. In the past, Hyperliquid relied on excellent product experience and support from institutional LPs to form a trading depth close to that of centralized exchanges. However, as core LPs actively reduce their market-making exposure for mainstream assets like BTC and ETH, it suggests that the platform's liquidity is not entirely endogenous, but still relies on external professional capital for sustained support.

This also means that although Hyperliquid is an on-chain trading platform, its underlying liquidity logic is not entirely decentralized. The order book model still requires professional market makers to take on inventory risk, rather than relying mainly on passive liquidity pools like AMMs. When market makers' risk preferences decline, the platform may still maintain high trading volumes on the surface, but its fragility in extreme scenarios could be significantly magnified.

3. Hyperliquid's Growth Is No Longer Just About Crypto Perpetuals

From a purely crypto-native perspective, Hyperliquid's success is not hard to understand. It is based on an on-chain order book, providing a trading experience close to that of a centralized exchange, while constructing a valuation logic for exchange-type assets through HYPE buybacks, fee capture, and ecological expansion. For a considerable time, the market's core understanding of Hyperliquid was "on-chain Binance" or "on-chain Perp DEX."

However, it now seems that Hyperliquid is no longer just a perpetual trading platform for crypto assets, but is entering the traditional asset trading field through its unique mechanisms. Perpetual contracts for traditional assets like crude oil and silver are beginning to enter the top trading volumes on the platform and are even occupying important positions among the top ten trading volumes on Hyperliquid during certain times. This is crucial. One of Hyperliquid's most imaginative aspects may not be moving BTC and ETH perpetuals onto the chain, but turning the "market close times" of traditional markets into tradable assets.

Traditional financial markets do not operate continuously 24 hours a day. During weekends, holidays, and unexpected geopolitical events, traditional exchanges such as CME and ICE may be closed. However, risks themselves do not stop just because exchanges are closed. Wars, sanctions, oil supply interruptions, central bank statements, political events, etc., can occur while traditional markets are closed. At such times, the market still needs a place to express expectations, hedge risks, and form price references.

Hyperliquid has found a new growth entry point in this gap. During the geopolitical conflicts related to the US and Iran, when traditional markets were closed, perpetual contracts for WTI crude oil on Hyperliquid could still be traded in real time, reflecting price shocks before the reopening of traditional markets.

This means that Hyperliquid's narrative may have expanded from "crypto asset trading" to "continuous pricing of global risks." It is not just an on-chain casino or another Perp DEX; rather, it is attempting to become the price discovery layer during traditional market closures.

From this perspective, Hyperliquid's value does not entirely stem from decentralized ideologies but from practicality. When traditional markets close, it remains open; when macro risks cannot wait for the next trading day, it provides a place for immediate price expression. This demand is real and explains why trading in traditional assets has quickly grown on Hyperliquid.

4. From Crude Oil to SpaceX, Hyperliquid is Expanding Its Business Radius

The rapid expansion of Hyperliquid into traditional asset trading is primarily closely related to the HIP-3 mechanism. According to official information, HIP-3 allows deployers to create new perpetual contract markets after staking a certain amount of HYPE. Deployers can define market parameters, oracle sources, leverage limits, and necessary settlement rules.

This mechanism is significant for platform growth. It effectively opens up the ability to launch trading pairs that was previously restricted to centralized exchange internal teams, now allowing external market deployers to participate. As long as someone is willing to bear the costs and provide market design, Hyperliquid can theoretically quickly expand into more asset categories. This has transformed it from a crypto perpetual platform into a scalable on-chain derivatives foundation.

At the same time, Hyperliquid's latest HIP-4 has further opened new product boundaries. Unlike HIP-3, which primarily targets perpetual contracts, HIP-4 leans more towards Outcome Trading, which involves predictive markets and event contracts. These types of contracts are typically priced and settled based on the outcome of real-world events, such as whether a price reaches a certain range, whether a macro event occurs, and so on. In other words, HIP-3 allows Hyperliquid to extend to more perpetual assets, while HIP-4 pushes it further into the predictive markets and event trading arena.

However, the problem also arises here. Perpetual contracts are not simple spot trades, especially when the underlying assets expand from cryptocurrencies to crude oil, stocks, Pre-IPO, and other tangible world assets, the issues the platform faces become more complex. Additionally, as HIP-4 further introduces predictive markets and event contracts, the regulatory scope that Hyperliquid encounters may extend beyond derivatives trading itself, potentially involving event contracts, gambling, election forecasts, sporting outcomes, and macro event trading among more sensitive areas.

In other words, the more successful Hyperliquid's growth becomes, the more diverse its regulatory challenges will be. It is no longer just an unlicensed trading platform; rather, it is becoming a market experiment that brings the most difficult to enter, most threshold-laden, and most controversial price discovery elements of traditional finance onto the chain.

From a product perspective, this innovation is highly attractive. In the past, ordinary traders could hardly participate in price discovery for unlisted companies like SpaceX, relying only on rumors in secondary markets, private fund valuations, or public market assessments post-listing. The emergence of on-chain Pre-IPO perpetuals enables the market to continuously price unlisted assets at an earlier stage. Moreover, if HIP-4 continues to evolve, it might also allow users to express their judgments on macro events, market outcomes, and real-world events through predictive markets.

However, from a regulatory perspective, this also means that Hyperliquid has entered a more sensitive area. Because Pre-IPO assets are not merely cryptocurrencies; their pricing often involves information asymmetry, non-public financing, accredited investor restrictions, and securities issuance rules. Furthermore, predictive markets are not normal trading products; their outcome decisions, event setups, and participant scopes have long been under regulatory disputes. Once these on-chain prices start to be referenced broadly by the market, they will not just be speculative contracts, but could become external price signals that influence private market expectations, assessments of macro events, and even the pricing of tangible assets.

5. Pressure from CME and ICE is Essentially a Price Discovery Rights Struggle

Meanwhile, CME and ICE are pushing the CFTC and American legislators to strengthen regulation over Hyperliquid. Their concerns are primarily centered around several aspects: Hyperliquid's current anonymous trading model may lead to market manipulation and sanction evasion risks; the rapid growth of crypto and commodity-related trading on the platform may affect key market price discovery, including crude oil; without customer identification and transaction monitoring, regulatory bodies may find it difficult to confirm participant identities and trading motives, among others. On the surface, this appears to be traditional exchanges questioning the regulatory practices of on-chain derivatives platforms. However, at a deeper level, this resembles a struggle for price discovery rights.

CME and ICE have long held important trading and clearing infrastructures for global commodities, stock indices, and interest rate derivatives. Their value comes not only from matchmaking trades but also from benchmark prices, liquidity networks, clearing credits, and regulatory recognition. When Hyperliquid begins to establish on-chain prices for crude oil, stock indices, Pre-IPO offerings, and even event contracts while traditional markets are closed, it effectively touches the core moat of traditional exchanges.

This is also why the regulatory pressure on Hyperliquid has rapidly increased after the growth of traditional asset trading. If it were merely a crypto-native Perp DEX, traditional exchanges might not pay as much attention. However, when it starts to become an instant trading venue for weekend oil prices, geopolitical conflicts, stock index expectations, and private asset valuations, the question shifts from "Is a DeFi project compliant?" to "Who has the right to generate prices when global markets are closed?"

Hyperliquid's response is also worth noting, as it emphasized in its comment document submitted to the CFTC that on-chain trading records are publicly accessible in real-time, and all orders, executions, and settlements are traceable, theoretically offering greater transparency than traditional markets. Moreover, 24-hour trading can reduce price gaps when traditional markets open, allowing markets to reflect information more continuously.

This response is not without merit. On-chain transparency can indeed reduce some risks associated with opaque transactions and can provide comprehensive data for post-event investigations. However, transparency does not equate to compliance. Regulatory agencies care not only about whether transactions can be seen but also about participant identification, the ability to intercept abnormal transactions, whether sanctioned parties are excluded, whether market deployers bear obligations, and who is responsible for maintaining market order during systemic events.

More notably, CME itself is also accelerating the complement of 24-hour trading capabilities. CME's official promises that its crypto futures and options will enter a 24/7 trading model on May 29, 2026; in addition, CME plans to launch products like Nasdaq CME Crypto Index Futures. In other words, traditional exchanges are not opposed to 24-hour trading itself; instead, they want to incorporate this capability into a regulated framework while requiring on-chain competitors to bear similar compliance costs.

Source: https://www.cmegroup.com/markets/cryptocurrencies/24-7-crypto-trading.html

Thus, the conflict between Hyperliquid and traditional exchanges is not merely a simple confrontation of new versus old finance, but rather a collision of two market orders. One order emphasizes openness, transparency, 24/7 operation, and global permissionless access; the other emphasizes access, monitoring, clearing, licensing, and accountability. The former is more efficient, while the latter has heavier institutional costs. However, when trading subjects enter crude oil, stock indices, Pre-IPO assets, and predictive markets, institutional costs become difficult to avoid long-term.

6. Deeper Considerations

Is Hyperliquid truly the next-generation exchange of on-chain finance, or is it a rapid expansion beyond the regulatory boundaries? If viewed from short-term trading data, it remains in a strong cycle, with trading volume, open interest, HYPE interest, and the expansion of traditional asset trading all indicating that market demand is genuinely present. However, if viewed over a longer timeframe, the withdrawal of market makers and the pressure from CME and ICE may be revealing a deeper issue: the on-chain trading infrastructure is entering the belly of traditional finance, but the corresponding responsibility structure has not matured in tandem.

6.1 From Crypto Exchanges to Macro Price Discovery Layers

Hyperliquid's early competition focuses on how to achieve a better perpetual trading experience on-chain. It addresses internal issues within the crypto market, specifically how users can obtain low latency, high liquidity, and a rich offering of trading pairs without relying on centralized exchanges.

However, with the advancement of HIP-3 and HIP-4, Hyperliquid is entering another stage. It is no longer just serving crypto assets but is starting to serve macro risks, private asset expectations, and real event outcomes. Crude oil prices, stock index fluctuations, geopolitical events, Pre-IPO valuations, predictive markets, and traditional market closures may all become sources of its growth.

This is also where it becomes most imaginative. The time structure of traditional financial markets does not adapt to the current speed of information dissemination. Information is transmitted in real time, risks occur instantly, but many assets' official trading venues are not open in real time. Hyperliquid provides an alternative outlet, allowing market participants to continue expressing expectations during traditional market pauses.

However, this also means it is no longer just a product issue, but rather a market order issue. A platform that only allows users to trade MEME or crypto perpetuals still has its impact primarily within the crypto sphere; but if it starts to influence oil prices, stock indices, and macro asset expectations, it will naturally enter the purview of regulators and traditional exchanges.

6.2 The Illusion of Liquidity Behind Scale Growth

Hyperliquid's current data remains impressive, but as the platform scale grows, it becomes increasingly important to be wary of the illusion of liquidity. An increase in trading volume does not necessarily mean a healthier market, particularly in high-leverage perpetual markets where trading volumes are often magnified by volatility, liquidations, high-frequency arbitrage, and repeat turnover.

To some extent, the withdrawal of liquidity does not necessarily indicate institutional pessimism. For market-making institutions, periodically reducing exposure may provide the opportunity to maintain space for future liquidity deployment at a more cost-effective basis. However, what is truly critical is whether there are still enough professional capital willing to assume counterparty risk when unilateral market conditions arise. The changes in Wintermute and Auros' related addresses indicate that institutional market makers have begun to reassess this issue. They do not deny Hyperliquid's product capabilities, but have set higher requirements for the future risk compensation.

As regulatory uncertainties rise, traditional asset trading becomes sensitive, and the platform receives public scrutiny from CME and ICE, market makers need to consider not just trading profits but also address exposure, compliance inquiries, unexpected exits, and tail-end events. Market-making capital naturally chases profit but is also extremely averse to unquantifiable risks. Once a type of risk cannot be effectively measured by models, the most immediate response is to decrease positions, cancel orders, and reduce quote depth.

Therefore, the core of this event is not whether Hyperliquid's liquidity will collapse immediately but rather that its liquidity costs may begin to rise. If Hyperliquid wishes to maintain depth and continue to provide market makers with a high-yield, high-growth, low-friction environment, it may need to offer market makers higher returns, clearer rules, or lower institutional risks. Otherwise, the larger the platform trading volume, the more pronounced the liquidity gaps in extreme scenarios may become.

6.3 Responsibility Reconstruction in Open Markets

What makes Hyperliquid attractive is that it lowers the barriers to market creation and asset trading. But as market creation becomes more open, the boundaries of responsibility will also blur.

In traditional exchanges, launching a new futures contract typically requires strict product design, regulatory review, risk control models, clearing arrangements, and market monitoring. In an on-chain environment, the responsibilities between market deployers, oracles, market makers, protocols, and users are fragmented, and any single entity may not bear full responsibility for the ultimate risk.

This may be acceptable in crypto-native assets as participants generally assume high risks and self-responsibility. However, in traditional assets and predictive markets, the situation can change. Crude oil, stock indices, and Pre-IPO prices have externalities that affect not just speculators but may also influence expectations in real markets. Additionally, event contracts and predictive markets involve decision-making on outcomes, participant scopes, and pricing real-world events. As on-chain prices begin to be referenced, observed, or arbitraged externally, regulatory agencies will demand clearer responsibility chains.

This is also an issue Hyperliquid cannot avoid in the future. It can continue to emphasize on-chain transparency or the efficiency gains of 24-hour trading, but if it cannot answer "Who is responsible for market quality? Who is responsible for unusual trading? Who is responsible for entry vetting? Who bears the responsibility for clearing extreme risks?” then its traditional asset expansion will remain in a gray area.

7. Conclusion

The controversies surrounding Hyperliquid do not indicate the end of the story; rather, they demonstrate that it has truly entered the sights of traditional financial systems. In the past, discussions about Hyperliquid often revolved around whether an on-chain perpetual trading exchange could replicate the efficiency of centralized exchanges; now, discussions about Hyperliquid are increasingly about whether a permissionless on-chain market is qualified to participate in the price discovery of crude oil, stock indices, private equity, and even real-world events.

This is also the most attention-worthy aspect of the recent withdrawals by market makers. The changes in addresses related to Wintermute and Auros do not necessarily signify a rejection of Hyperliquid's product capabilities. On the contrary, professional market makers often understand liquidity, trading volume, and profit very well. What they are truly repricing is the regulatory, reputational, and tail-end exit risks that Hyperliquid faces as it transitions from a crypto-native exchange to a global price discovery layer.

From this perspective, Hyperliquid's biggest challenge moving forward may not be whether trading volume can continue to grow, but whether such growth will alter its risk nature. If the growth primarily stems from crypto-native assets like BTC, ETH, and SOL, it remains a high-efficiency on-chain trading platform. However, if growth increasingly derives from physical assets like crude oil, stock indices, SpaceX Pre-IPO, predictive markets, etc., it must address the longstanding questions of traditional finance: Who is qualified to create markets? Who is responsible for price quality? Who bears the responsibility for unusual trading? Who maintains order during extreme market conditions?

Therefore, the core contradiction for Hyperliquid moving forward is not a simple clash between decentralization and regulation, but a rebalancing between open price discovery and institutional responsibility. Its most valuable contribution lies in proving that global risks can be traded in real-time on-chain; its most dangerous aspect also lies in the fact that once such prices begin to be referenced by external markets, they cannot indefinitely remain in the narrative of "code is law."

Hyperliquid is entering a more challenging phase, where previously, the market focused on whether its on-chain order book met demands for efficiency, depth, and experience. Now, the true test is whether it can introduce clearer identity, compliance, and responsibility mechanisms while maintaining its openness and on-chain characteristics, thus meeting traditional finance requirements for market structure and regulation. Whether it can accomplish this transformation will determine whether Hyperliquid remains merely a leader among Perp DEXs or becomes a core variable in the next generation of financial market structures.

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