ICE Investment, L2 Launch, and 1000x Leverage Mechanism: The Iterative Path of Hyperliquid's On-Chain Finance

Author: Owen, WEB3 Research at GO2MARS

The next key phase for Hyperliquid hinges on two points: whether it can charge for the pricing of order book usage, and whether it can maintain unified liquidity between compliant markets and offshore markets.

Introduction: An Exchange Chain Begins to See L2

When mentioning Hyperliquid, most people think of the largest decentralized perpetual contract exchange. In 2025, its annual trading volume was about $2.9 trillion, accounting for approximately 80% of on-chain perpetual trading volume, surpassing Coinbase.

However, Hyperliquid is also a public chain. Its order book runs directly on its own L1, and a series of applications such as lending, DEX, and staking are gathered on HyperEVM. Now, this public chain has its first L2: On November 9, Kinetiq, Hyperliquid's largest staking protocol, will launch Elysium, targeting processing capabilities approximately 100 times that of HyperEVM, and it can read the entire order book of Hyperliquid.

Elysium is not an isolated event. Over the past month, the role of Hyperliquid has been changing; it is no longer just an exchange, as more and more teams begin to view it as infrastructure to build their own products on:

• Papertrade only borrows Hyperliquid's prices, launching a product on October 10 with "1000x leverage, mining on loss," achieving a nominal trading volume of over $1 trillion in just one week;
• Wall Street has taken notice of its matching engine, with ICE, the parent company of the New York Stock Exchange, announcing an investment in Trade[XYZ] on October 29, planning to establish a regulated perpetual contract market for U.S. users based on Hyperliquid's technology;

A cryptocurrency casino, a Wall Street securities exchange, and a new chain may seem unrelated, but they are all layered uses of Hyperliquid. This article will follow this thread to clarify the changes happening in this exchange chain and where it will lead Hyperliquid.

1. Hyperliquid's Architecture: Exchange First, Chain Later

Hyperliquid's starting point is the opposite of most public chains: the team initially aimed to create an exchange, and upon realizing that existing chains could not handle it, they built their own chain, directly integrating the order book, matching, and clearing into the chain.

This path is now being followed by several companies. Robinhood launched its own chain to issue stock tokens, Circle is working on a stablecoin payment chain called Arc, and Ondo is also building its own asset chain. However, most of them only place assets on the chain while trading still occurs within their own systems. Hyperliquid's trading engine operates on-chain, allowing the order book to be directly called by other programs on the chain, and the subsequent story unfolds from this point.

Hyperliquid consists of two parts: HyperCore and HyperEVM, where: HyperCore is Hyperliquid's self-built trading system that can only call preset functions; HyperEVM is an Ethereum-compatible environment specifically for deploying contracts for external protocols. (The architecture is shown in the diagram below)

From the diagram, the following points can be observed:

First, there are three types of markets on HyperCore: the official native market, perpetual markets deployed by third parties under HIP-3, and prediction markets deployed by third parties under HIP-4. They share the same matching engine and margin accounts, allowing users to trade with a single account across U.S. stocks, crude oil contracts, and official BTC and ETH contracts within the same trading system.

Second, contracts on HyperEVM can read the order book prices, positions, and balances of HyperCore in real-time, and can also send order instructions to HyperCore. Contracts on other chains must rely on external oracles to relay exchange prices; on Hyperliquid, contracts and exchanges are on the same chain and can call directly.

Third, these functions have been gradually opened since 2025, and the ecosystem is progressively improving. (The timeline is shown in the table below)

Fourth, the three recent cases are very representative, marking that Hyperliquid's infrastructure is basically in place, and the ecosystem is entering the application expansion phase:

• Papertrade is deployed on HyperEVM, only reading HyperCore's mid-price, with trades settled against its own USDC liquidity pool;
• Trade[XYZ] opens a market directly on HyperCore through HIP-3, and the planned U.S. market by ICE is also based on HIP-3, using Hyperliquid's matching engine;
• Elysium is an L2 settling to HyperEVM, reading the entire order book of HyperCore through its own nodes, and will later support direct ordering.

These three cases correspond to three depths of external access to Hyperliquid: borrowing prices, borrowing matching, and building a separate chain for the order book. The following three chapters will unfold in this order.

2. Price Layer Access: Papertrade

Papertrade launched on October 10, deployed on HyperEVM, with only BTC and ETH markets. It does not place orders on Hyperliquid, only reading Hyperliquid's mid-price once when opening and closing positions, with profits and losses settled against a USDC liquidity pool, essentially a bet between users and the pool.

It has two selling points: first, a maximum leverage of 1000 times; second, losses lead to mining. The PAPER token is not pre-mined and is not distributed to the team or investors; it is only minted when a position is closed at a loss or liquidated. Staking PAPER allows users to share in the profits from the liquidity pool. According to the design, those who lose money will gradually become shareholders of the market makers.

2.1 Rules and Chip Distribution Under Fair Launch

Papertrade claims to have a fair launch, but a closer look at the rules and data reveals that ordinary users find it hard to benefit.

First, the rules are unfriendly to retail investors. The minimum position is $10,000, and once a position is opened, no additional margin can be added. Opening and closing positions require queuing, with larger orders prioritized, and profits are discounted. Researcher @xizhe_chan has compiled statistics on 134,000 profitable orders, showing that the smaller the price movement, the more is deducted:

Second, the chips are taken by large players who entered the market early. The earlier one loses money, the more PAPER they can obtain: losing $1 at the opening can mint 100 tokens, but after ten hours, only 40 tokens remain, and by October 17, only about 12 tokens are left. Large players generally open both long and short positions with two accounts, losing money while mining tokens and recovering their principal, with costs only about 30% of a direct liquidation, and then quickly recouping through dividends:

By October 20, the top 1000 wallets held 88% of the PAPER, claiming 91% of the dividends.

Third, the rules were changed just ten days after launch. After Paragon and Aster launched PAPER pre-contracts, Papertrade announced that PAPER could only be staked for dividends, not transferred or sold. The team's reasoning was that if outsiders could short PAPER, attackers could manipulate prices while draining the liquidity pool and profiting from shorting PAPER. However, many were initially attracted by the expectation that PAPER could be sold later, and this expectation was completely dashed with the rule change.

The market reaction was immediate. Papertrade's daily revenue dropped from a peak of about $25 million in the first week after launch to $178,000 by October 22, with TVL declining by more than 70%:

2.2 Insights: The First Native Application of the HyperEVM Ecosystem

Although Papertrade's popularity was short-lived, it offers three insights for the Hyperliquid ecosystem.

First, HyperEVM now has a truly native application. Previously, most lending and DEX protocols on HyperEVM were forks of other chains, while Papertrade is entirely built on the price of HyperCore, and it would not exist without Hyperliquid.

Second, the threshold for creating trading products on Hyperliquid has been significantly lowered. Papertrade does not have market makers or an order book; it relies solely on reading Hyperliquid's prices, achieving a nominal trading volume exceeding $1 trillion in just one week after launch. External teams do not need to build liquidity themselves to launch new trading categories.

Third, the price of Hyperliquid itself has become a core resource. In the past, it was believed that the core asset of a chain was block space, but Papertrade shows that contracts on HyperEVM can directly read the real-time prices from the Hyperliquid order book, eliminating the need to rely on external oracles for forwarding. This represents a more native source of on-chain pricing:

Of course, the more the price is relied upon, the greater the pressure to protect it. On the night of Papertrade's launch, someone used large orders on Hyperliquid to push ETH prices while simultaneously opening large positions on Papertrade to profit. Such price manipulation phenomena are issues that future applications of HyperEVM need to consider seriously.

3. Matching Layer Access: Trade[XYZ] and Wall Street

Papertrade leverages price, while Wall Street (ICE) aims to leverage the entire trading system. Trade[XYZ] is the largest deployer on HIP-3, directly establishing perpetual markets for U.S. stocks, indices, crude oil, and foreign exchange within HyperCore, using Hyperliquid's matching engine and margin system, with prices sourced externally, including formal authorization for S&P 500 contracts from S&P Dow Jones.

3.1 One Year Since HIP-3 Launch: Scale Expansion and Market Concentration

HIP-3 is an open mechanism launched by Hyperliquid in October 2025, allowing any team to establish its own perpetual contract market on HyperCore by staking 500,000 HYPE. One year after its launch, HIP-3 has accumulated approximately $665 billion in transactions, with its share of Hyperliquid's perpetual trading volume rising from 0.2% to 51.3% by July this year. Its growth has been driven by several market trends: precious metals at the beginning of the year, crude oil during the weekend trading halt due to the Iran conflict in March, and the listing of SpaceX and storage chip stocks in June and July.

The content of trading is also constantly shifting: in March, commodities accounted for 64% of HIP-3's trading volume; by July, individual stocks and Pre-IPO contracts had risen to 62%. On the day of SPCX's listing, contracts worth $1.4 billion were traded, equivalent to 30% of HIP-3's total volume that day. After July, HIP-3's share fell back to around 30%, with over 70% of trading still coming from official native markets.

Concentration has remained virtually unchanged. As the first third-party market launched on HIP-3, Trade[XYZ] has consistently maintained a share of around 90%, rising to approximately 97% in October. Its advantages lie mainly in the speed of new listings and liquidity:

• Fast listings, able to seize hot topics. The new market slots for HIP-3 are shared among all deployers, with one auctioned every 31 hours. Once won, the deployer decides which assets to list. Trade[XYZ] has ample funds, securing 8 out of 23 slots auctioned in August, and it deploys quickly: the median time from on-chain registration of a new market to the first transaction is only 3.3 days, with 65% of markets launching within a week and 47% within three days.
• Good liquidity, able to trade immediately upon launch. HIP-3 markets do not share liquidity with Hyperliquid's official markets; each market has its own independent order book, and depth must be built by deployers through market makers. Trade[XYZ] can attract market makers and invest funds, ensuring that new markets start with narrow spreads and deep order books. Good liquidity attracts traders; with more traders, market makers are more willing to participate. Once this cycle is established, it becomes difficult for newcomers to break it.

In addition, Trade[XYZ] has a strong brand advantage and product credibility. It was developed by the Hyperunit team, which built the spot asset infrastructure for Hyperliquid, and has received formal authorization from S&P Dow Jones Index Company to launch the first licensed S&P 500 perpetual contract. Therefore, although Trade[XYZ] is a third-party deployer, it is viewed by the market as the closest entity to Hyperliquid and has, in some respects, become synonymous with the HIP-3 ecosystem.

3.2 From Prevention to Access: Three Paths for Wall Street

Trade[XYZ]'s biggest selling point is the 7×24 hour trading that traditional exchanges cannot provide. When U.S. stocks and CME crude oil futures are closed on weekends, Hyperliquid is one of the few places where these assets can still be traded. During the Iran conflict in March, JPMorgan analysts noted that some traditional traders shifted to Hyperliquid to trade crude oil.

Wall Street's response has also evolved. From March to November, three paths have emerged around Hyperliquid, each closer than the last:

First Path: Leveraging centralized exchanges to bypass Hyperliquid and provide 7×24 trading themselves. In March 2026, ICE invested in OKX, first launching crude oil perpetual contracts on OKX, and then establishing a joint venture with OKX to bring tokenized stocks from the NYSE and ICE futures to OKX users. Meanwhile, ICE and CME expressed concerns to congressional members about Hyperliquid potentially manipulating oil prices, pushing for it to accept CFTC regulation. At this point, Hyperliquid was still seen as a competitor to be guarded against.

Second Path: Direct access to Hyperliquid. At the end of the month, the CFTC allowed perpetual contracts to be listed as futures in the U.S., clearing the compliance path, and ICE's attitude shifted accordingly. ICE's CEO publicly stated that this exchange with only 11 people is "larger than Nasdaq" and mentioned that discussions had taken place multiple times. On October 29, ICE invested in Trade[XYZ], planning to launch the U.S. market ICE[XYZ]: Hyperliquid will provide matching technology, Trade[XYZ] will design the market, and ICE will operate the exchange and handle clearing, pending CFTC approval. Thus, Hyperliquid transitioned from a competitor to a trading service provider for ICE.

The Third Path: Holding Tokens and Brokerage Channels. Wall Street's access to Hyperliquid is not only through exchanges but also involves token holders taking a step forward. Hyperliquid Strategies, a publicly traded company holding approximately 38.9 million HYPE tokens (NASDAQ: PURR), was originally just a $HYPE treasury company that financed token purchases and staking through the stock market. On November 5, it applied to become a futures broker, aiming to bring U.S. users into the HIP-3 market. This way, PURR holds HYPE while also generating trading volume for Hyperliquid: the more users trade, the more transaction fees are repurchased, benefiting the $HYPE it holds.

As shown in the diagram, ICE remains at the center, firmly grasping the benchmark price, clearing, and compliance, while the other links are handed over to partners: OKX is responsible for centralized matching, Trade[XYZ] designs and operates the HIP-3 market, Hyperliquid provides the on-chain matching engine, and Hyperliquid Strategies fills in the entry point for U.S. users. In this landscape, Hyperliquid and OKX occupy the same position as trading venues connected to ICE, one operating off-chain and the other on-chain. Consequently, Hyperliquid has transformed from a counterpart to be guarded against into a trading infrastructure actively integrated by Wall Street.

3.3 Division of Labor: Licensed Institutions Responsible for Clearing, On-Chain Responsible for Matching

Before ICE, licensed institutions had already approached Hyperliquid. On September 16, Kraken's parent company Payward announced it would deploy the HIP-3 market through its subsidiary Bitnomial (a CFTC-licensed exchange and clearinghouse) and subsequently obtained Hyperliquid's HIP-3 whitelist, becoming the first CFTC-regulated deployer. However, compared to Payward, which originated from the crypto industry, ICE is the parent company of the New York Stock Exchange. Its investment in Trade[XYZ], along with its previous layout with OKX, truly marks the formal entry of mainstream Wall Street exchanges.

Putting these collaborations together, the logic of division of labor is clear:

It can be seen that the licensed institutions guard the segments where they have the most advantages. When cooperating with OKX, ICE holds the crude oil benchmark price. In the U.S. market, both ICE and Payward keep clearing and compliance in their own hands. Clearing is the most heavily regulated and highest threshold segment in traditional exchanges: clearinghouses must manage client margins and bear default risks, requiring substantial capital, mature risk control, and regulatory licenses, making it difficult for new entrants. ICE already operates multiple clearinghouses, and Bitnomial holds both exchange and clearinghouse licenses.

Matching is increasingly resembling a standardized service; whoever has the faster engine and better liquidity gets used. The CEO of ICE also positioned these perpetual markets as a supplement to futures business during the earnings call.

For Hyperliquid, this means that on-chain matching is beginning to be adopted as infrastructure by licensed institutions, and it is likely that more institutions will follow the same path to integrate.

The problem lies here. The regulated U.S. market must conduct KYC and set entry thresholds, and the HIP-3* whitelist is designed for this purpose. Even if such a market runs on Hyperliquid's matching engine, only U.S. clients and market makers who pass the entry can trade; a large number of existing offshore traders cannot enter, and depth must be rebuilt. In other words, Wall Street is taking away Hyperliquid's matching technology, and its most valuable liquidity network may not follow suit.

4. Order Book Layer Access: Elysium

Papertrade borrows prices, Wall Street borrows matching, and Kinetiq takes it a step further: building another chain, Elysium, next to Hyperliquid specifically to access its order book.

4.1 Overview of the Elysium Project and Market Expectations

Elysium is created by Kinetiq, the largest staking protocol on Hyperliquid, first announced on X on August 24, opened the testnet on September 22, and plans to launch the mainnet on November 9. It is built on the Arbitrum tech stack, settling to HyperEVM, with $HYPE used to pay transaction fees, and a block time target of about 100 milliseconds.

Discussions around it generally fall into three voices:

• Bullish people bet on $KNTQ. Half of Elysium's fee revenue will be used to repurchase and burn Kinetiq's token $KNTQ. On the day of the announcement, $KNTQ rose by about 30%, and on October 28, it reached a historic high of $0.4547 after nearly 48% growth in two weeks.

Note: Elysium currently does not have its own token; related trading mainly revolves around the developer Kinetiq's token $KNTQ. It is primarily traded on Hyperliquid's spot market (aside from Kraken and MEXC, mainstream centralized exchanges have not yet listed it), and there is also a version that can be traded on EVM chains via Chainlink cross-chain to Base.

• Ecological perspective values its experimental significance. Some community views believe that HyperEVM has long lacked strong support from Hyperliquid's official team, leading to a somewhat stagnant ecosystem; Elysium is an attempt by the internal team to fill this gap, with Kinetiq having both funds and expansion capabilities, bringing in a batch of top applications on the first day to attract new attention to the HyperEVM ecosystem.
• Skeptics focus on real data. Some community users have statistically noted that the testnet has accumulated about 30 million transactions in roughly three weeks, with total fees of only about 269 HYPE over 30 days. Based on the same activity level, the mainnet could generate about $11,000 monthly for repurchasing $KNTQ, which is far from KNTQ's fully diluted valuation of about $350 million, further raising doubts about Kinetiq's claim that "Elysium will bring over $100 million in revenue to Hyperliquid each year." Interestingly, the lock-up period for KNTQ team and investor tokens will expire on November 27, shortly after the mainnet launch, which will bring a new wave of selling pressure.

These three voices point to the same thing: the market is currently betting on expectations, not revenue, and these expectations will need to be validated by real trading after the mainnet launch.

4.2 Shortcomings of Hyperliquid's Spot Trading: New Tokens Cannot Access HyperCore, HyperEVM Runs Slowly

Elysium aims to address the long-standing shortcomings of Hyperliquid's spot trading. While Hyperliquid's perpetual contracts rank among the best globally, its spot trading volume has consistently lagged, with issues arising from two layers:

• New tokens can only start on HyperEVM. HyperCore's spot order book is suitable for trading mature assets; new tokens must first bid for listing slots and have professional market makers continuously place orders. Newly issued tokens cannot achieve this and can only trade on issuance platforms and AMM liquidity pools, which can only be deployed on HyperEVM.
• HyperEVM is deliberately throttled. HyperEVM and HyperCore run on the same chain and are processed by the same group of validators. To prevent application computations from occupying transaction resources, Hyperliquid has limited HyperEVM's processing capacity: small blocks are about one per second, and applications can only read the best quotes from the order book. This is sufficient for lending and staking but cannot support professional market pools that need to refresh quotes multiple times per second.

As a result, new assets find it difficult to grow within the Hyperliquid ecosystem. Kinetiq has pointed out that the spot trading volume handled by professional market pools on Solana far exceeds that of Hyperliquid's spot market.

4.3 Elysium's Solution: Speeding Up Applications and Paving the Way for New Assets

The first step is to enhance speed. Elysium focuses on high speed, with a processing capacity target of about 100 times that of HyperEVM, but it is important to clarify where the speed lies: it is compared to HyperEVM, not HyperCore. Elysium's block time target is about 0.1 seconds, while the median latency from order placement to confirmation on HyperCore is only about 0.2 seconds; the trading engine has never been slow.

Speeding up does not come without cost. Compared to HyperEVM, Elysium can read a more complete order book, but the credibility of the data may be compromised.

In other words, Elysium trades trust for speed and data: the prices read by HyperEVM are guaranteed by Hyperliquid consensus; the entire order book read by Elysium comes from its own running nodes, without on-chain verification. Hyperliquid officials have also listed improving HyperEVM throughput as a future direction, while Elysium bets that the official upgrades won't come too quickly.

Step Two: Establishing a New Asset Flow Path. With a faster environment, Elysium has designed a route for new assets from their inception to flowing back to Hyperliquid:

Specifically:

• New coins are first issued on Elysium's issuance platform and regular AMM trading pools, undertaking the earliest trades;
• Once trading becomes active and reaches a certain scale, they enter Elysium's professional market-making pool, where market makers provide deeper quotes;
• Subsequently, qualifying assets upgrade to HyperCore's spot order book, and finally list on the HIP-3 perpetual contract.

Under this path, Elysium is responsible for incubation, while Hyperliquid is responsible for taking on mature assets, with trading volume ultimately returning to HyperCore. If this path proves viable, Hyperliquid effectively gains a stable new source of assets.

This is also Kinetiq's own way out. Its staking business has peaked, with TVL down over 60% from the high in October 2025, so creating Elysium allows Kinetiq to transition from a staking protocol to a chain operator, also finding a new revenue source for $KNTQ.

Overall, Elysium fills the gap for Hyperliquid in spot and new assets, while for Kinetiq, it opens a second growth line beyond staking, with both parties' interests temporarily aligned here.

4.4 The Essence of Elysium: Making Order Book Access a Chain

Although Elysium is a new chain, what it truly sells is not block space, but the ability to access the Hyperliquid order book. This becomes clear when viewed alongside Papertrade:

From borrowing just one bid price to reading the entire order book and being able to place direct orders, external dependence on the Hyperliquid order book is deepening. However, all of this remains a promise: performance has yet to be validated on the mainnet, and whether liquidity can gather also depends on whether Hyperliquid officials accept it, while the bulk of on-chain revenue goes to $KNTQ, not $HYPE ------ the implementation of Elysium still needs to be observed.

Five, Hyperliquid's Role Transformation: From Exchange to Trading Infrastructure

Looking at the previous three steps, external teams connect to Hyperliquid in various ways, but there is one commonality: they no longer view Hyperliquid merely as a trading platform. Hyperliquid's role is transforming, gradually taking on three functions within trading infrastructure:

As a price source, it quotes for off-hours markets. Papertrade dares to build a trading platform relying solely on Hyperliquid's prices, provided that these prices are active and trustworthy. This credibility has extended beyond crypto assets: during weekends when US stocks and crude oil are off, Hyperliquid is one of the few places still quoting; before companies like SpaceX go public, Pre-IPO contracts have already begun trading, and in hindsight, their performance closely matches the opening performance, with Trade[XYZ] having submitted opinions to the US SEC based on this.

As a matching service provider, it leaves compliance to licensed institutions. In ICE's plan, matching remains with Hyperliquid, while clearing and client access are handled by ICE and futures brokers; Hyperliquid Strategies is applying for futures broker qualifications, aiming to bring US clients in compliance; the official is also preparing to launch the HIP-3 market with access thresholds, with independent operators responsible for compliance. The chain itself does not handle compliance, leaving it to licensed institutions to interface with regulators, allowing an offshore chain exchange to enter the US market without changing itself.

As a listing destination, it takes on new assets that have grown externally. The new asset path designed by Elysium ends at HyperCore's spot and HIP-3 perpetual contracts; HIP-3 deployers bid for a listing spot every 31 hours, competing for the opportunity to open a market on the Hyperliquid order book. External teams are responsible for building entrances and incubating assets, which are then migrated to Hyperliquid for trading once mature.

These three functions are built on the same premise: the depth and activity of the Hyperliquid order book. External teams are willing to conduct business around it precisely because of this; once the order book loses its advantage, these three functions will also waver.

This is also the fundamental difference between Hyperliquid and other exchanges building their own chains. Chains from companies like Robinhood and Circle mainly carry on-chain assets, with matching still completed within their own systems, leaving external teams unable to call upon them; Hyperliquid, on the other hand, places the order book itself on-chain, allowing its prices, matching, and liquidity to be used externally.

------ This aligns with Jeff Yan's vision: he stated at TOKEN2049 in October that Hyperliquid hopes to become an open infrastructure for various financial products to connect, rather than competing with front-end platforms, allowing developers to use its markets and liquidity directly without having to build their own matching and clearing systems.

Six, The Value of $HYPE: Ecological Expansion, Who Benefits?

More and more teams are connecting to Hyperliquid, and the ecosystem is rapidly expanding, but the benefits of this expansion will not automatically flow to HYPE. To understand this, we first need to clarify where the support for $HYPE comes from, and then see what new businesses and intermediaries have gained.

6.1 The Price Support for $HYPE: Fees, Buybacks, and DAT Treasury

$HYPE does not correspond to any company's equity, and protocol revenue will not be directly distributed to holders. Its price support is built on Hyperliquid's business: how much the platform can earn and how this revenue translates into demand for $HYPE. Currently, this support mainly comes from three aspects:

• Transaction Fees are Fundamental. The transaction fees generated by users trading on Hyperliquid are its primary source of income. In 2025, Hyperliquid's total perpetual contract trading volume is estimated to be around $2.9 trillion. As of the last 30 days ending October 28 of this year, the income attributable to HYPE holders is approximately $63.94 million, ranking first among all protocols. Starting in October, the interest generated from USDC deposits by users has also become a new source of income, independent of trading volume.
• Buybacks Turn Income into Buying Pressure. Approximately 97% to 99% of Hyperliquid's net transaction fees go into a support fund, which continuously buys back HYPE in the market; 90% of the USDC interest within the ecosystem is also used for buybacks. In this model, the higher the income, the more buybacks occur, directly converting trading activity into buying pressure for $HYPE.

It is worth noting that the scale of $HYPE buybacks is quite substantial. Since June of this year, Hyperliquid has invested between $38 million and $74 million monthly into buybacks, and as of October 13, the support fund has accumulated over 48 million HYPE, costing approximately $1.365 billion.

• DAT Treasury is a Major Buyer Outside the Protocol. Nasdaq-listed company Hyperliquid Strategies (NASDAQ: PURR) is a digital asset treasury company that specifically holds $HYPE. It raises funds through the stock market to buy $HYPE, increasing its holdings from 12.5 million at the time of its listing in December 2025 to approximately 38.9 million as of October 28, with an average cost of about $56, all used for staking. This buying pressure is unrelated to protocol income and depends on how much it can raise in the stock market.

6.2 Value Distribution of New Businesses: Middle Layer Diversion and HyperCore Reflow

The buyback funds for $HYPE come from transaction fees on HyperCore; only transactions executed on HyperCore will convert into buying pressure for $HYPE. Therefore, how much value the new business can capture for $HYPE depends on two factors: where the transactions are executed and how the income is distributed.

According to this standard, the value created by new businesses has two directions: part of it returns to HyperCore with trading volume, while part remains in the middle layer that builds these businesses, and currently, the latter occupies a significant proportion:

HIP-3 is the only business that has brought a significant amount of trading back to HyperCore, but the income has not returned in sync. To attract deployers and users, most markets are in growth mode, with significantly reduced rates, and the remaining fees must be shared with deployers, resulting in a trading volume proportion far exceeding the fee proportion:

Additionally, the trading volume of new businesses is highly concentrated among a few teams, leading to concentrated income as well. Trade[XYZ] alone accounts for over 90% of HIP-3's share and takes half of the fees. This is partly a result of Hyperliquid's expansion phase: the official encourages third-party entry with reduced fees and profit-sharing to enlarge the market first.

Overall, Hyperliquid is using concessions to exchange for expansion. The short-term contribution of new businesses to $HYPE is limited; ultimately, how much they can bring depends on how much trading volume the middle layer can bring back to HyperCore.

7. Conclusion: The Order Book is Hyperliquid's Core Asset

Papertrade, ICE, and Elysium have different ways of accessing Hyperliquid, but they all seek the same thing: its order book. Papertrade reads prices from the order book, ICE uses the matching engine behind the order book, and Elysium wants to read the entire order book and place orders directly. Even Elysium, as an L2, serves a different purpose than L2s on Ethereum. Ethereum's L2s are used to offload transactions from the mainnet, while Elysium is designed for faster and more complete access to Hyperliquid's order book. The value of most public chains lies in block space, while Hyperliquid is being contested externally for its order book.

For the order book to be utilized in this way, two conditions must be met:

• First, it must be on-chain, allowing external programs to call it directly. The chains of Robinhood and Circle only carry assets; matching is still completed within their own systems, making it inaccessible externally.
• Second, it must be deep enough and open 24/7, allowing anyone to participate. Thus, weekend crude oil prices and pre-IPO SpaceX prices are formed here first. Wall Street has taken notice of Hyperliquid for this reason. After the CFTC lifted the ban on perpetual contracts in May, ICE shifted from promoting regulation of Hyperliquid to investing in Trade[XYZ] to open markets on it.

However, the external reliance on the order book does not mean Hyperliquid will automatically benefit. Currently, at least two issues remain unresolved.

First, its risks and rewards are asymmetric. External products can read Hyperliquid's prices without paying, but once large amounts of funds settle at these prices, price manipulation becomes profitable. Such situations have already occurred on the first night of Papertrade's launch. The larger the scale of external references, the greater the manipulation pressure on Hyperliquid's order book, while the income goes to external products.

Second, compliance will segment liquidity. ICE and Payward use Hyperliquid's matching technology, but compliant markets must set entry barriers, preventing offshore traders and market makers from entering. The most valuable aspect of Hyperliquid is its unified liquidity, which is precisely the part that compliant markets find most challenging to inherit. While matching technology can be exported, liquidity may not be able to be transferred along with it.

These two issues will ultimately reflect on the value of $HYPE. The value of $HYPE comes from HyperCore's transaction fees and buybacks, and only transactions executed on HyperCore count. Currently, Hyperliquid is lowering fees, sharing profits, and opening price readings externally, trading concessions for more access points, while a significant portion of income remains with Trade[XYZ], Kinetiq, and PAPER stakers. This is a strategy of expanding first and recovering later; whether recovery can occur depends on how much trading volume these access points can ultimately bring back to HyperCore.

Therefore, the key for Hyperliquid in the next phase lies in two points: whether it can price and charge for the use of the order book, and whether it can maintain unified liquidity between compliant and offshore markets. Achieving both will make the open order book its most irreplaceable advantage. Failing to do so may result in it merely providing pricing and matching as a backend engine for others, leading to greater value loss as the ecosystem becomes more vibrant.