Excluding venture capital and prioritizing early enthusiasts turned out to be a winning combination for the DeFi token
At the end of last year, crypto Twitter was raving about the latest airdrop. Nothing new there — buzzy airdrop announcements blast into social newsfeeds every week. But this time the hype was real. In fact, HyperLiquid ($HYPE) had pulled off one of the most extraordinary airdrops ever.
The company took a very different route to market, reserving the lion’s share for early users with no set-asides for VCs, centralized exchanges, or market makers.
A cult-like following, pent-up VC demand, and kudos from analysts culminated in the most lucrative airdrop in history, valued at close to $7.5 billion at the end of 2024.
It was so singularly successful that analysts now wonder how sustainable the community-first approach really is. Did HYPE break the mold, only to break its own model?
- Created by Hyperliquid Labs, Hyperliquid is a DeFi-focused L1 blockchain created to host the project’s flagship futures exchange, Hyperliquid DEX.
- In November 2024, Hyperliquid launched its HYPE token via airdrop.
- The airdrop became the most lucrative of all time, worth about $7.5 billion at the end of 2024.
Hyperliquid is a layer one (L1) blockchain built to host decentralized finance (DeFi) applications. It uses delegated Proof of Stake (PoS or dPOS) secured by a consensus mechanism called HyperBFT.
Hyperliquid says it can handle throughput of 100,000 orders per second, recording every order, cancellation, trade, and liquidation with block latency of less than one second.
A note to investors from ETF and Mutual Fund manager VanEck calls Hyperliquid a “hybrid blockchain” that can be considered both a layer 1 (L1) and a layer three (L3).
Operating its own set of validators makes Hyperliquid an L1, VanEck analysts wrote. However, since most of Hyperliquid’s trading capital is in USDC stablecoin, which is bridged from the Ethereum (ETH) layer-2 (L2) chain Arbitrum, Hyperliquid effectively becomes an L3 — dependent on both Arbitrum and Ethereum for the state of USDC tokens.
This dual framework was chosen, VanEck added, because it allows Hyperliquid to optimize its blockchain to process many more TPS than other blockchains while also giving Ethereum users a safer, more responsive bridge.
“The L1 architecture gives Hyperliquid a scaling advantage over competitors while the L3 framework gives Hyperliquid access to Ethereum’s massive base of users and assets.”
The Hyperliquid DEX, a fully on-chain order book perpetual futures exchange, is the project’s flagship application. Originally, Hyperliquid’s L1 was optimized for the Hyperliquid DEX. Low fees, transparent on-chain trades, up to 50x leverage, and one-click trading are some of its main features.
Although Hyperliquid had earlier announced in April 2023 that the project has no plans to “support general-purpose smart contracts” on the Hyperliquid L1, it is currently developing a general-purpose Ethereum virtual machine (EVM) called HyperEVM.
The HyperEVM is not a separate chain but rather secured by the same HyperBFT consensus as the rest of the L1. This lets the EVM interact directly with the native components of the L1, such as spot and perp order books,” said Hyperliquid.
The company behind the project, Hyperliquid Labs, is led by CEO Jeff Basedzos and a group of tech heavyweights from Harvard, CalTech, and MIT. Members of Hyperliquid Labs have also previously worked at Airtable, Citadel, Hudson River Trading, and Nuro.
The team initially worked on proprietary market-making in crypto in 2020, later expanding to develop DeFi solutions in 2022.
According to Hyperliquid’s official website, Hyperliquid Labs is a self-funded team and has not taken external capital.
HYPE, the native token of Hyperliquid L1, is designed for staking and gas fee payment on HyperEVM.
Prior to the airdrop, Hyperliquid said tokens allocated to core contributors will be locked for one year after genesis, and that most token vesting schedules would be completed between 2027 and 2028.
No tokens were allocated to private investors, centralized exchanges, or market makers.
Here are the key HYPE token tokenomics as of January 9, 2025:
In a year marked by crypto community frustration over sky-high valuations of venture capital-backed tokens, and criticism of low float, high fully diluted valuations, Hyperliquid’s community-first approach reinvigorated a bloated crypto airdrop market.
The project was rewarded for its egalitarian approach and has gained a kind of cult status among crypto faithful, not least because it appears to have the utility and range of use cases promised by its founders.
In March 2025, the Hyperliquid DEX is widely considered to be the best perpetual futures DEX. Figures from DefiLlama recorded a 24-hour volume of over $6.19 billion in Mid-February. Solana-based Jupiter came second with a volume of $983.2 million.
