Written by: Arthur Hayes

Compiled by: Saoirse, Foresight News

We walk into the frozen forest and climb the steep volcano. It’s just another day of skiing and meditative hiking. Surrounded by the silent snow forest, my thoughts run free. When you are fully concentrated, slowly climbing the volcano step by step, placing one ski in front of the other thousands of times, the creativity that can burst forth is astounding. I cherish this tranquility for three months.

Both body and mind crave rest and recovery, and during the ski season, this means going to a real ski resort. On the day at the resort, I remove my grip tape, hop on the mechanical lift, and in just a few minutes, it takes you hundreds of meters into the sky. The chairlifts and gondolas are great, but sometimes I have to share this tranquility with others.

I don’t like to talk much in the gondola and prefer to sit quietly in the corner, but there are always some chatty people at the ski resort who enjoy striking up conversations with strangers to pass the time.

The questions are harmless yet allow them to place me in their mind. We often end up talking about careers— I’m someone who skis every day, but I’m neither a guide nor a coach, which seems odd. I politely respond, simply saying, “I work with computers.” The advantage of the tech industry is that people tend to assume you make some money but cannot delve further since they don’t even understand how electricity works, let alone the peculiar things you can do with “computers.” Naturally, the conversation cools at this point, and thankfully, it’s finally time to get off and ski.

What do I, or we at the Maelstrom team, actually do?

We are traffic manipulators, making money by monetizing attention. The main method of monetization is by going long on Bitcoin and various altcoins, seldom going short. By garnering market attention to our views, we believe that in the long run, the market will validate our judgments.

Now, please focus your attention on Hyperliquid (HYPE).

I don’t like to go short because when not leveraged, your maximum gain is only 100%, while your maximum loss is unlimited. I always strive to go long on convexity rather than shorting, so I remain a net long in the market.

At this challenging stage, Bitcoin has decisively broken through previous highs; are there truly high-quality altcoins that can achieve absolute gains?

The answer is: yes. Because during every consolidation or bear market in cryptocurrency, the altcoins that perform the best are exchange tokens. Even when prices fall, exchanges can still continue to earn transaction fees, sometimes even making more than when prices rise, especially when they benefit from the long-term growth of decentralized exchange (DEX) trading volumes.

During the period of market consolidation to decline at the beginning of 2023, the most sought-after exchange token was GMX. In April 2023, GMX set a historical high of $90. Why? Because at that time, it was far ahead in perpetual contract DEX trading volume, with open interest and trading volume surging, driving protocol revenue to climb sharply. More importantly, most of the revenue was distributed to GMX holders.

When the consensus of fiat credit expansion shifts from growth to contraction, which exchange token could still skyrocket?

Data sourced from DefiLlama on March 7, 2026

Hyperliquid is currently the leading perpetual contract DEX and also the project with the highest revenue excluding stablecoins. 97% of its revenue is used to repurchase HYPE from the market. In the entire crypto industry, there is no other project that can return such a high proportion of its money to token holders like Hyperliquid.

Unfortunately, holding stablecoins like USDT or USDC does not entitle you to share in their net interest income. Therefore, if the market believes in HYPE, it can achieve absolute increases. My target price for HYPE in August 2026 is $150, approximately five times the price of around $30 when I wrote this article.

To move from “hell” to “Valhalla,” Hyperliquid needs to restore its 30-day revenue to an annualized level of $1.4 billion— a level it reached in August of last year. To make the following text easier to understand, I will first present the financial model.

The key assumptions I need to verify are: the price-to-earnings ratio (P/E) and the amount of HYPE tokens unlocked by the team each month. The formula for the P/E ratio is:

P/E = (circulating supply × price) ÷ (30-day annualized revenue × repurchase ratio)

My model predicts that the total revenue from HIP-3 and non-HIP-3 will grow from $843 million in March to $1.4 billion in August.

I will explain how Hyperliquid regains its historical peak of 30-day annualized revenue in the context of increased competition in perpetual contract DEXs.

The last part is to estimate how much HYPE tokens the team will receive each month based on data from the past three months.

Conducting stress tests on the model under different scenarios can effectively enhance the credibility of the assumptions. I will test some assumptions from a pessimistic perspective to see how “high” one must believe to accept my target price of $150.

CEX vs DEX

One of the best things about Hyperliquid is that its trading volume growth does not require an overall increase in global crypto perpetual contract trading volume. As long as a few percentage points of the trading volume from centralized exchanges shift to Hyperliquid, it can easily double its 30-day annualized revenue in just a few months. It only needs to increase its market share by 3.97% to reach the $1.4 billion revenue goal. Considering that Hyperliquid didn’t exist less than three years ago, this is entirely feasible.

Hyperliquid can seize trading volume from CEX effectively, but which crypto derivatives can attract users over? People come for stock perpetual contracts and binary options, but stay for trading Bitcoin, Ethereum, and Solana.

HIP-3 allows anyone to launch perpetual contracts without permission. By staking 500,000 HYPE tokens, you can utilize Hyperliquid’s matching and margin engine to create any trading market you desire. TradeXYZ does just that, with flagship products including perpetual contracts for silver, gold, Nasdaq 100, and S&P 500.

By the way, the silver and gold markets went live less than three months ago, and daily trading volume has already reached hundreds of billions. As the dirty fiat financial system arbitrarily changes rules to suppress people's desire to escape centralized currency, this will become a new price discovery place.

Screenshot taken on February 5, 2026, 11:20:00 UTC

In just four months, the trading volume of HIP-3 contributed to nearly 10% of Hyperliquid’s total revenue. Launching tokens without permission has always been the holy grail of DEX, and the rapid growth in trading volume proves this is the key for Hyperliquid to leave its competitors behind.

To increase Hyperliquid revenue from March to August by 66%, HIP-3 must bear the flag. Especially amidst the entire crypto market capitalization maintaining its current low level, Hyperliquid must provide traders with fresh, exciting on-chain trading targets. Precious metals, AI-related stocks, and crude oil are what ordinary players want to trade. Now, anyone in the world can trade around the clock through perpetual contracts, with leverage higher than traditional financial exchanges.

For these reasons, my model predicts that HIP-3 revenue will rise by 160% within six months.

Adding icing on the cake are the prediction markets. Hyperliquid recently announced that HIP-4 will support permissionless launch of prediction markets. I expect HIP-4 to go live in the next three months. Players will flock to Hyperliquid's prediction markets to trade binary options and zero-day-to-expiration options (0DTE). It's difficult to predict the revenue growth before launch, so I haven’t included it in the model. If the Hyperliquid team delivers high-quality code as they have in the past, it would result in an immediate and significant boost in revenue—an additional bonus.

Unfortunately, Hyperliquid is not the only perpetual contract DEX. The competition is intense because this is the next main battlefield for trading. The emergence of numerous low-fee and zero-fee DEXs at the end of last year suppressed the expected valuation of Hyperliquid.

So what has changed from then to now to make me believe once again that Hyperliquid's dominance is unshakeable?

Is it real?

For crypto CEX or DEX, faking trading volume is easy as pie.

When I was at BitMEX, we often joked about having a “volume booster”— an exchange starts a program to automatically generate false trades to increase activity.

Now many leading exchanges routinely use volume boosters to claim they are the “largest,” misleading traders into thinking there is real liquidity. For DEX, creating wallets for wash trading is even simpler, which is a major source of wash trading.

Liquidity mining is also a common means to boost activity: DEX provides points or platform tokens based on trading volume, and traders wash trade between wallets.

Wash trading and liquidity mining do not deepen real liquidity. We cannot accurately determine the proportion of these activities in trading volume. The only objective metric to measure the quality of an exchange is to calculate the ADV/OI ratio (average daily volume / open interest).

Because traders must put up real funds as collateral for opening positions, open interest (OI) reflects the extent to which real users use the platform. Average daily volume (ADV) can easily be inflated by wash trading and mining, but when adjusted using OI, we can obtain organic trading volume driven by traders with real risk preferences. Thus, the lower the ADV/OI ratio, the better.

Among the top 5 perpetual contract DEXs, Hyperliquid has the most authentic trading volume since it has the lowest ADV/OI ratio. When traders realize that much of the liquidity on competitor platforms is fake, or that rewards/token mining have ended, they will flow back to Hyperliquid.

In the long run, Hyperliquid’s share of real trading volume will continue to rise. This will reinforce the narrative that HYPE “is not afraid of competition.”

Many remember that my previous tactical bearish view on HYPE was partly due to the competition from low-fee DEXs. Now I believe, Hyperliquid is first in the industry in “real trading volume,” and for at least the next six months, I am no longer worried about competition.

Regarding competition, the next thing to consider is: after accounting for slippage, which DEX has the truly best liquidity?

I took snapshots of the order books for Bitcoin/USD perpetual contracts from five platforms and calculated the slippage for nominal amounts of $100,000, $1 million, and $10 million market buys and sells.

You can see that on Hyperliquid, most of the time, the cost for large transactions is the lowest. Therefore, even if competitors have explicit transaction fees that are 1-2 basis points lower, true large-scale traders will still flock to Hyperliquid because they can trade at larger sizes with minimal market impact.

I got rich

Hyperliquid has a team of only 11 people and has created the best DEX product in history. Wealth should flow to them through the locked HYPE tokens.

When Maelstrom was bearish on HYPE at the end of last year, a concern was raised: how many tokens would the team actually sell into the market each month, which is uncertain. Because Hyperliquid did not accept venture capital investments, whether the team voluntarily refrains from selling newly unlocked tokens essentially comes down to a political decision within Jeff and the team. They have already restricted token sales.

After distributing nearly 20% of the reward tokens in November and December of last year, the team only distributed about 1% of the reward tokens in January and February. I suspect that the high distribution in the initial phase was for tax payments and improving living conditions, and once that demand was met, the team significantly reduced release to help HYPE rebound. This is just my speculation.

History does not repeat itself exactly, but it rhymes. Based on this, I assume the monthly release volume is the average of these four months: 815,750 tokens.

Looking forward

The market is forward-looking. How much are players willing to pay for Hyperliquid's future earnings? Currently, HYPE’s P/E ratio is about 12 times. How does it compare to traditional financial exchanges?

To determine a reasonable valuation level, I refer to the current P/E ratios of the world’s top exchanges like the Chicago Mercantile Exchange (CME), the new brokerage Robinhood targeting young, aggressive investors, and Coinbase, which is heavily influenced by U.S. regulations. The P/E ratios of these institutions vary widely, generally ranging from 26 to 40 times. In contrast, $HYPE has only a 12 times P/E ratio, which is clearly undervalued.

Part of the reason for the low valuation is that Hyperliquid is not a publicly traded company, leading to smart contract and counterparty risks, and thus a natural lower valuation multiple. Moreover, most mainstream centralized spot exchanges do not support $HYPE trading, making it more difficult for ordinary investors to purchase, and thus, it cannot be inflated to extremely high valuations like many altcoins. Nevertheless, even so, a 12 times P/E ratio is still outrageously low.

In just a few months, Hyperliquid's HIP-3 index and precious metals trading market have become key price discovery places during weekends when traditional financial exchanges like CME close. I certainly don’t know if trading algorithms need to play golf on weekends.

At the very least, from the industry trend perspective, HYPE deserves a higher valuation premium.

Explanation about market cap and fully diluted valuation (FDV):

I use market cap instead of FDV, as there are differences due to circulating supply. Market cap only accounts for tokens that are currently in circulation, while FDV represents all future tokens. Since this is a transaction with a six-month cycle, using the current market cap is reasonable. Indeed, Hyperliquid may again initiate an airdrop in the future, thereby expanding its circulating supply. However, up until now, the team has not indicated an upcoming airdrop, so I do not currently consider this risk and its impact on circulating supply.

Stress test

Assuming the team unlocks 9.91 million HYPE tokens each month, and the market only gives a 12 times forward P/E ratio, but Hyperliquid’s 30-day annualized revenue still rebounds to the historical high of $1.4 billion, what would the result be?

The target price would fall to $58, still about 75% higher than the current $30. This result is not bad.

I have not made a pessimistic assumption for revenue, for a simple reason: if Hyperliquid's revenue cannot grow from the current level, the token will not rise. If you hold that view, then do not buy HYPE under any circumstances.

HYPE Expert

Source: CoinGecko

I used HYPE/BTC to illustrate that the market has recognized the value of this token.

We painfully know that unless you short, Bitcoin has dropped from HYPE’s peak last September to about $20. I believe the catalyst for HYPE’s resurgence is: the team’s token release volume plummeting from 9.91 million in January to merely 140,000.

Additionally, the incentives of competing DEXs for points and tokens have gradually expired, causing their attractiveness to traders to decline rapidly. The remaining trading volume may be fake, but as I have previously shown, in terms of order book liquidity, Hyperliquid is the place with the lowest trading costs.

Our Maelstrom team started to test the waters at just over $20. On the way of skiing and climbing, I kept wondering: if the macro economy continues to slump in the short term, what should I allocate to? What kind of project qualifies as truly high-quality—having real users, real revenues, and still able to return profits to token holders?

From these dimensions, Hyperliquid is the highest quality project in the entire crypto industry. After delving deeply into it and writing this article, my confidence has only strengthened.

As macro investment guru Druckenmiller said: “Invest first, do research later.”

Therefore, HYPE rapidly became our largest liquid altcoin position. We plan to continue selling off all inferior positions and keep increasing our HYPE holdings within the current price range.

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