Let me tell you from the perspective of trading volume, fees, and income why I am bullish on HYPE in the long term.

Author: Thor Hartvigsen

Compiled by: Azuma, Odaily Planet Daily

background

Since the launch of HYPE, Hyperliquid has seen significant growth in both trading volume and revenue.

HYPE was officially launched on November 29, opening at around $2, and experienced a sharp rise in December before falling back recently (down about 34% from its all-time high).

What’s next for HYPE and Hyperliquid?

This article will provide an in-depth analysis of the fundamentals of Hyperliquid and HYPE, explore HYPE's upside expectations, and analyze potential valuations based on transaction volume and revenue growth in 2025.

Trading volume data

While some expected trading volumes on Hyperliquid to drop following the HYPE airdrop (something that has historically happened on other derivatives exchanges), the opposite is true. Since then, Hyperliquid's trading volume has increased significantly, hitting new highs of more than $10 billion in daily trading volume many times.

The HYPE airdrop accounts for 31% of the total supply. It is expected that 42.81% of the supply will be available for future distribution and community rewards. Although it is foreseeable that part of the remaining shares will be used for staking incentives and HyperEVM Layer 1 ecological incentives, the possibility that traders and HYPE holders will receive some kind of reward again without knowing it in the future is not zero.

At a price of $25, 42.81% of HYPE supply is equivalent to approximately $11 billion.

Since the launch of HYPE, in addition to contract trading volume, Hyperliquid's spot trading volume has also increased significantly, with trading volume of US$250-500 million on most trading days.

Hyperliquid vs CEX

For a long time, I have been tracking the trading volume of Hyperliquid compared to centralized exchanges (CEX) such as Binance.

Hyperliquid's bullish expectations involve market share growth as more users and transaction volume begin to move on-chain over time. Comparing Hyperliquid to Binance, it is clear that there is still a long way to go. However, as shown in the chart below, Hyperliquid's market share showed a clear upward trend in December. Over the past two weeks, Hyperliquid's relative market share has been around 5-8%.

According to data from Coingecko, Binance’s recent daily derivatives trading volume ranged from $60 billion to $150 billion. However, these trading volume figures cannot be verified from the CEX side, so they need to be treated with caution.

Relative to Bybit, Hyperliquid's market share recently reached 25% of the former (peak data).

Fees and income

contract trading

The handling fees on Hyperliquid are paid by trading users on the platform. Hyperliquid’s fees are lower compared to other exchanges such as Binance, a move aimed at incentivizing more trading activity. For perpetual contract trading, for most users, the fee for market orders is 0.035% and the fee for limit orders is 0.01%. The higher the transaction volume, the lower the fees.

These fees are charged by the HLP market making vault, insurance fund, assistance fund (mainly responsible for repurchases) and some other miscellaneous addresses on Hyperliquid. The Hyperliquid team has no public information on the specific distribution of platform transaction fees, so it is difficult to accurately estimate HYPE's repurchase data.

spot trading

Users pay fees on the spot market to buy and burn the specific token being traded. Not surprisingly, HYPE currently accounts for the majority of Hyperliquid spot trading volume. So far, HYPE's spot transaction fees have exceeded 100,000 HYPE (more than $2 million at current prices).

Overall, this has no material impact on the supply of HYPE compared to the bailout fund's buybacks (at least not yet).

spot auction

Hyperliquid also generates significant revenue from spot auctions. At $500,000 per auction, Hyperliquid could earn an additional $141.29 million in annual revenue.

Relief Fund and HYPE Buyback

While the details of revenue distribution from spot auctions and contract trading are not yet known, we can measure daily HYPE buyback data through the aid fund.

Two weeks ago, I published an analysis article on X analyzing the HYPE buyback situation of the bailout fund within 48 hours. At that time, a total of approximately 151,000 HYPE was repurchased within 48 hours, which was equivalent to an annual repurchase effort of approximately US$686 million.

During those two days, Hyperliquid's average daily trading volume reached $8 billion.

Valuation framework

Entering 2025, HYPE's rising expectations are a bet that Hyperliquid's trading volume will continue to grow and spot auction demand will continue to grow, because this will lead to an increase in Hyperliquid's revenue, thereby amplifying HYPE's repurchase efforts.

A key reason for Hyperliquid’s growing trading volume is that Hyperliquid still has billions of dollars in future rewards, which will make Hyperliquid a very profitable place to trade. Other potential catalysts include the spot listing of CEX and the launch of HyperEVM.

@fmoulin 7 once made a good analysis of the potential valuation of HYPE. Assuming that the price-to-earnings ratio (P/E) is 30, the corresponding HYPE price expectations are as follows under different levels of contract transaction fee income and auction income.

Hyperliquid's average daily trading volume over the past 14 days is approximately $4.89 billion, with auction prices of approximately $500,000.

With this in mind, we come up with a forecast for Hyperliquid's annual revenue of $587.5 million, assuming a P/E ratio of 30, which means HYPE could reach $52.78. Please note that the circulating market value is calculated here rather than FDV, because future unlocks are mostly related to community incentives rather than internal group unlocks.

There are two other points worth noting. As of now, almost all of these revenues will be used to repurchase HYPE; more and more HYPE has been mortgaged (currently accounting for about 25%), which effectively reduces the liquidity supply.

All in all, if you believe Hyperliquid volume and adoption will continue to grow, there are plenty of reasons to be bullish on HYPE over the longer timeframe.