Author: Coin Metrics State of the Network

Translated by: Deep Tide TechFlow

Deep Tide Introduction: HIP-3 by Hyperliquid turns the listing of perpetual contracts from validator voting into staking and auctioning, making Trade.xyz the largest player, capturing over half of Hyperliquid's trading volume in August. It attracts on-chain traders with perpetual contracts on AI chip stocks, crude oil, and S&P indices, while the fee sharing continues to repurchase HYPE. Understanding this mechanism is crucial for assessing the ecosystem concentration of Hyperliquid and the value capture of HYPE.

Key Points

In August, Trade.xyz's perpetual market trading volume accounted for 55% of Hyperliquid's total market trading volume.

In July, the trading volume of AI and power stock and index on Trade.xyz accounted for about 53% of its total trading volume.

The change in trading volume drove Trade.xyz to generate $5 million in fees over the past month. After the 50/50 revenue split with Hyperliquid, most of its earnings were used to buy back HYPE from the open market and reduce circulating supply.

Introduction

Hyperliquid's average daily futures trading volume over the past 30 days was about $8.5 billion, accounting for approximately 4.6% of global futures trading volume. Perpetual futures contracts have no expiration date and do not require management of the underlying assets, making it easier to gain futures exposure. Compared to options with expiration dates, perpetual contracts only require a small funding fee to maintain the position and keep the futures prices anchored to spot prices. Hyperliquid brings traditional financial operations such as matching order books and low-latency trading on-chain, combined with perpetual futures.

The Hyperliquid Improvement Proposal HIP-3, launched in October 2025, made the creation of the perpetual futures market permissionless. Builders can now deploy their own futures markets to generate revenue, expand the ecosystem, and reduce reliance on Hyperliquid validators.

In this issue of the State of the Network, we explore the HIP-3 upgrade of Hyperliquid, Trade.xyz's market share, and how the fee sharing from popular non-crypto markets creates value for the HYPE token.

How HIP-3 Improves Hyperliquid

HIP-3 unlocks the ability for independent builders to create perpetual markets. Previously, validators would vote to approve the creation of new perpetual markets. This would cause delays and concentrate reliance on Hyperliquid validators.

With HIP-3, builders staking 500,000 HYPE (approximately $27 million) have the right to directly deploy three perpetual markets. After deployment, they can bid to create more perpetual markets. HIP-3 uses a 31-hour Dutch auction, with a starting price of 500 HYPE (approximately $27,000), where builders bid to deploy the next market. After a builder wins the auction, the starting price for the next auction doubles from the transaction price and then linearly decreases to 500 HYPE until the next builder wins the auction. The proceeds from the auction are used to buy back HYPE tokens and reduce circulating supply.

In addition to the forfeitable requirement to stake 500,000 HYPE, the auction cost has raised concerns about the centralization of the HIP-3 builder market—only a few builders can be profitable. Trade.xyz has become the largest HIP-3 perpetual exchange. Its open interest exceeds $4 billion, contributing increasingly high trading volume and fees to the Hyperliquid ecosystem.

Figure: Source: Talos CM Market Data

Trade.xyz Rises as a Dominant Builder

Trade.xyz has captured a significant share of Hyperliquid's perpetual trading volume. Since January 2026, Trade.xyz has completed over $460 billion in trading volume, accounting for about 30% of Hyperliquid's total trading volume.

Figure: Source: Talos CM Market Data

Hyperliquid currently has a total of 484 markets: 232 are natively issued by Hyperliquid, 108 are deployed by Trade.xyz, and 144 are deployed by other HIP-3 builders. Over the past month, Trade.xyz won 8 new stock perpetual markets in 23 auctions. Trade.xyz also added stocks from chip manufacturers like GIGADEV and CXMT, and ETFs like LYTE and NCLD. In August, Trade.xyz's monthly trading volume exceeded Hyperliquid's native market, contributing about 55% of Hyperliquid's trading volume.

Figure: Source: Talos CM Market Data

Builders can create replicate markets, customize leverage limits, and oracles to provide traders with alternative markets. However, in existing replicate markets, Trade.xyz has taken nearly 100% of the trading volume. This forces smaller builders to differentiate through niche perpetual markets not yet listed by Trade.xyz.

Deeper Analysis of a Single Market

Trade.xyz focuses on expanding stock and commodity perpetual markets. Hyperliquid and Trade.xyz have captured one of the hottest narratives—AI/power trading. As traders explore the commoditization of power costs and build yield curves, Trade.xyz supports a variety of perpetual contracts related to AI companies and industry benchmarks.

Figure: Source: Talos CM Market Data

A basket of AI mega-cap firms and chip manufacturer perpetual contracts has taken off on Trade.xyz, contributing over 53% of daily trading volume in July. SK Hynix and Micron each contributed over 20% to trading volume for that basket of assets. SanDisk, DRAM indices, and NVDA follow closely in trading volume among the AI/power narrative markets.

Despite the recent attention to AI/power trading, examining Trade.xyz's daily hottest markets helps illustrate the popularity of perpetual contracts, particularly for traditional financial investments.

Figure: Source: Talos CM Market Data

Since January, in terms of cumulative trading volume, crude oil, silver, Brent crude oil, Nasdaq 100 substitutes, and S&P 500 contracts have been the top five perpetual contracts traded on Trade.xyz. Although trading volume was highly concentrated previously, traders can still react to events 24/7 through the market. After hours and on weekends, markets like crude oil may experience trading volume spikes due to geopolitical tensions. In August, these markets accounted for about 30% of Trade.xyz's total trading volume, down from a peak of 88%, indicating that traders are shifting their attention to newly listed markets on Trade.xyz.

Figure: Source: Talos CM Market Data

The development of perpetual contracts for pre-IPO stocks also presents significant upside potential. The SPCX IPO generated over $1.3 billion in trading volume on Trade.xyz, as traders speculated around the company's valuation. Trade.xyz's ability to quickly list markets can capture short-term opportunities and generate substantial fees for itself and Hyperliquid.

How Fees Are Generated and Affect HYPE?

Hyperliquid charges standard fees twice as high for limit and taker orders for perpetual contract markets not operated by validators. Currently, Trade.xyz is in growth mode, encouraging platform adoption by reducing fees by over 90%.

Trade.xyz generated $5 million in fees over the past month. These fees are split 50/50 with Hyperliquid, which primarily uses the funds to buy back and burn HYPE tokens.

Figure: Source: Talos CM Market Data

Since January 2026, we have observed a weak positive correlation between the price of HYPE tokens and Hyperliquid's total trading volume. The value capture of HYPE tokens is becoming increasingly diversified. The growth of prediction markets, pre-IPO perpetual contracts, and USDC reserve income all contribute to the valuation of HYPE and the Hyperliquid ecosystem.

Hyperliquid's aligned quoting asset (AQAv2) brings in additional revenue. For all outstanding USDC on Hyperliquid, Circle distributes 90% of the income generated from the underlying investments to Hyperliquid. As more perpetual contract markets denominate in USDC, Hyperliquid will gain more income for HYPE repurchases.

Trade.xyz leads as an HIP-3 builder in terms of open interest and trading volume. Over the past month, most of the perpetual contract trading volume has shifted from Hyperliquid's native markets to those launched by Trade.xyz. This can be attributed to the available markets and popular trends provided by Trade.xyz—AI/power narrative, geopolitical tensions, and pre-IPO valuation exposure.

If Trade.xyz exits growth mode, higher actual fee rates could increase fee income and potential HYPE buybacks. A resurgence in crypto perpetual contract activity could provide additional sources of trading volume. Hyperliquid and Trade.xyz continue to offer services and integrations that benefit the ecosystem, potentially bringing more value to HYPE tokens. Trade.xyz is attracting more users to participate in traditional financial investments through its 24/7 market.