A few cartoons to help you quickly understand Hyperliquid’s auction mechanism

Author:nairolf

Compiled by: Shenchao TechFlow

"Friends, what is Hyperliquid's bidding mechanism?"

Here’s a (super) simple way to explain the HIP-1 proposal proposed by @HyperliquidX.

"What's this?"

HIP-1 is a limited-supply fungible token standard.

It defines the rules for how tokens are listed on the Hyperliquid platform. Tokens are sold through Dutch auctions, with each auction lasting 31 hours, and the starting price is twice the price of the previous auction.

"Can't understand?"

Hyperliquid is an L1 blockchain with its own exchange.

It supports multiple perpetual contract trading, allowing users to go long or short on almost any token, and can use leverage.

In addition, it also has a spot trading area, similar to Binance or Coinbase, but it is completely decentralized, hope this helps you understand.

"I understand, but how to achieve it?"

Because Hyperliquid is decentralized, a fair mechanism is needed to decide which tokens can be listed, rather than being decided arbitrarily by a single team or individual. This is different from centralized exchanges, which usually decide to list tokens by charging fees or selecting them themselves.

"How exactly does it work?"

Hyperliquid implements token listing through an auction mechanism.

To put it simply, a new "listing right" will be auctioned publicly every 31 hours. The starting price of the auction is twice the price of the last "listing right" transaction, and the price gradually decreases as time goes by until someone buys it.

"Give me an example"

Let’s say you want your “XYZ” token to be listed on Hyperliquid.

Contacting the team directly to request listing will not work. Instead, you need to purchase a "listing right," which requires participating in an auction.

"How much does that cost?"

The first step is to check the last transaction price of "listing rights", for example, it was $69,420.

The starting bid for the next auction will be double that, at $138,840.

This price will gradually decrease over time until someone decides to buy. Thereafter, this auction process will be repeated every 31 hours.

“So I can list my token?”

That's right. Anyone can participate in the auction, and as long as they feel the price is right, they can purchase the "listing right" to have your token listed on Hyperliquid.

The 31-hour interval ensures that too many tokens are not listed, thus maintaining the scarcity of the platform and the uniqueness of the token.

Summarize

Hyperliquid’s auction mechanism determines the price at which new tokens are listed on spot exchanges.

Each auction is subject to time and price constraints - auctions take place every 31 hours, with a starting bid of twice the last sale price, and then the price gradually decreases until someone buys.