The cryptocurrency bear market has dragged down most major digital assets this year, but the hype has gone in the opposite direction. Year to date, the coin is up 23.9%, matching gold’s gains over the same period. The S&P 500 fell slightly, Bitcoin fell 23.7%, and Ethereum fell more than 33%.
This difference is notable not only because HYPE is cryptocurrency native, but also because it has become decoupled from the broader digital asset market. Its performance increasingly reflects the value of the platform behind it rather than the direction of the market.
HyperLiquid is the decentralized derivatives exchange that supports HYPE. It was established to monetize activities rather than for price appreciation. In a bull market, funds tend to be concentrated in spot exposure. In volatile environments characterized by capital drawdowns and macro shocks, derivatives trading volumes tend to persist. Traders switch from buying to holding positions, and the platform charges both parties a fee.
While trading volumes on rival platforms Aster and Lighter have declined in recent months, HyperLiquid’s trading volumes have increased, from $169 billion in December to more than $200 billion in January and February. At the same time, DefiLlama data shows that Aster’s market value fell from US$177 billion in December to less than US$100 billion in February, with Lighter’s decline even larger.
Since its inception, HyperLiquid’s total trading volume has now reached a staggering $4 trillion.
Volatility as a business model
HyperLiquid’s core product is perpetual futures, which allow traders to go long or short using leverage. When prices move higher, leverage amplifies the upside. When markets decline, short selling and basis trading step in. The exchange charges fees from both parties.
In a tumultuous year for the asset class, this structure has become even more important. Instead of relying on sustained price appreciation, exchanges capture volume. In sideways or declining markets, traders often increase frequency, hedge risk, or switch to relative value strategies. Activity replaces direction as the primary driver.
This business model has already produced positive results. Total protocol revenue increased 96% to $354 million in the third quarter of 2025, with total revenue reaching $286 million in the fourth quarter, most of which came from perpetual transaction fees.
This revenue is generated by an ultra-slim team of less than 15 employees, half of whom are dedicated to engineering. HyperLiquid founder Jeff Yan has also turned down investment from venture capitalists to remain independent — a rare bold move in the crypto industry.
Transactions outside trading hours
Recently, HyperLiquid has expanded beyond crypto-native currency pairs. It now offers comprehensive exposure to foreign exchange, commodities and major equity indices. It also offers weekend trading on U.S. stocks, an innovation that resonates with retail traders accustomed to the round-the-clock rhythm of cryptocurrencies.
For a generation that grew up on app-based brokerage platforms, the traditional market calendar feels limiting. As seen over the weekend, geopolitical escalations tend to occur outside of typical weekday trading windows. HyperLiquid’s structure allows traders to react in real time rather than waiting for Monday’s opening.
HyperLiquid’s silver market has also seen great success, with trading volumes approaching $750 million in the most recent 24-hour trading period, despite traditional markets being closed for much of Sunday.
The exchange has also launched pre-listing permanent markets related to companies such as Anthropic, OpenAI and SpaceX. These vehicles are synthetic and do not confer equity, but they provide directed investments in private companies. In effect, they create a parallel price discovery venue for retail participants who would otherwise be excluded from post-risk assessment.
What FTX is trying to build
The model echoes earlier visions. FTX launches 24-hour trading, tokenized stocks, and seamless leverage across asset classes. Its collapse stemmed from custody risks, poor balance sheet operations and the mixing of funds.
HyperLiquid runs on a non-custodial framework with on-chain settlement and transparent treasury mechanisms. Users interact with smart contracts rather than depositing funds on a centralized entity’s balance sheet. In the post-FTX era, this distinction has important implications. Retail traders who sustain losses from centralized failures remain sensitive to counterparty risk.
HyperLiquid offers many of the features that FTX once launched, but through an infrastructure designed to reduce reliance on a single custodian.
The exchange also leans towards competition and gamification. Leaderboards prominently rank traders based on their performance, creating protagonists like James Wynn, who lost $100 million on HyperLiquid after using leverage for a high-risk long trading strategy when the price of Bitcoin was above $100,000.
Mechanics encourage participation. Traders can build a reputation through short positions, market-neutral strategies, or well-timed directional bets that generate buzz on social media—effectively serving as a marketing tool even in volatile markets.
centralized testing
Claiming that HyperLiquid is immune to bear markets requires context. The deal faced a credibility hit a year ago, raising questions about devolution.
In April 2025, the total value locked in Hyperliquidity Provider’s vaults fell from $540 million to $150 million in one month. The triggering event is a transaction involving a token called JELLY. A trader opened a large short position on HyperLiquid while simultaneously purchasing the token on illiquid decentralized exchanges. Thin liquidity distorts price supply and forces vaults into toxic situations through liquidations.
Unrealized losses in vaults continue to mount as JELLY reports prices surge to levels not supported by deep liquidity. HyperLiquid intervened, forcibly closing the market and setting the JELLY settlement price at $0.0095 instead of the approximately $0.50 forwarded by the oracle. The decision protected the coffers from significant losses but sparked a backlash.
Critics argue that protocols marketed as decentralized exercise discretionary power and are reminiscent of centralized exchanges. Governance optics deteriorate rapidly. Treasury yields fell sharply and users withdrew their funds.
Security researchers described the incident as an economic design flaw rather than a smart contract vulnerability. Jan Philipp Fritsche of Oak Security describes it as unpriced vega risk, where leveraged exposure to volatile assets drains risk funds in a predictable way. The incident highlights how economic vulnerabilities can be as destabilizing as technological shortcomings.
HyperLiquid later modified its governance process, switching asset delisting to an on-chain validator voting mechanism. The change doesn’t eliminate censorship, but it addresses one of the main criticisms.
The vault’s TVL has since recovered to $380 million, offering users an annual interest rate of 6.93%.
Build resilience through activity
Despite the controversy, the exchange’s trading volumes remain strong and HyperLiquid is positioning itself as a mainstay in the ongoing cryptocurrency bear market as rivals Aster and Lighter lose momentum.
Risks remain. Regulators are likely to increase their focus on combined exposure to private companies and U.S. equities. Dispersion of liquidity in smaller markets could re-emerge pricing distortions. Governance mechanisms will still face pressure tests.
However, HYPE’s relative strength this year reflects structural differences. It is no longer a high-beta bet on digital asset appreciation, but more and more like a claim on a venue that monetizes volatility.
This positioning is important in a cycle defined less by sustained rallies and more by sharp swings.