A brand new paper by DeFi analyst Patrick Scott argues that regardless of shedding market share to rivals, HyperLiquid stays essentially the most investable decentralized trade for perpetual futures.
Perp DEX market is liquid
Perpetual futures — or perpetrator — is a crypto by-product that permits merchants to take a position on costs with out an expiry date. As merchants transfer their actions away from centralized exchanges (CEXs) like Binance, the decentralized platforms that host them, often known as purp DEXs, have soared in recognition.
Scott famous that PERP DEX has expanded from lower than 2% of CEX perpetual buying and selling quantity in 2022 to greater than 20% final month. Hyperliquid, which points the HYPE token, has been a serious driver of its progress.
Nonetheless, latest adjustments have raised questions. Whereas HyperLiquid’s share of Perp DEX buying and selling quantity has fallen from 45% to simply 8% in latest weeks, weekly buying and selling quantity at Binance-owned rival Aster has ballooned to greater than $270 billion. Different startups comparable to Lighter and edgeX additionally recorded triple-digit share will increase in exercise.
Why Hyperliquid nonetheless stands out
Scott argued that Hyperliquid’s fundamentals set it aside. The trade continues to generate sturdy earnings, trades at cheap multiples in comparison with its friends, and person persistence is mirrored in open curiosity.
“Not like quantity and income, which measure exercise, open curiosity measures liquidity; it’s way more sticky,” he wrote, noting that HyperLiquid nonetheless controls about 62% of the PERP DEX open curiosity market.
Past buying and selling, Scott highlighted enlargement plans together with the HyperEVM community, which already hosts over 100 protocols and $2 billion in combination locks, and USDH, a stablecoin backed by reserves held by BlackRock and Superstate.
One other initiative, HIP-3, will permit builders to launch a brand new PERPS market by staking massive quantities of HYPE, creating what Scott describes as a “supply” of tokens.
Scott warned that his thesis could be invalidated if HyperLiquid’s open curiosity or earnings decline considerably, or if USDH fails to acquire liquidity over the subsequent 12 months. However for now, he argues, HyperLiquid is in a greater place than rivals with hefty incentive applications.
