The Growing Fascination with Hyperliquid: Is This the Next Evolution in Cryptocurrency Trading?

By 2025, decentralized trading platforms have become major players within the cryptocurrency landscape, posing a significant challenge to established centralized exchanges. Hyperliquid, in particular, has drawn widespread attention due to its rapid surge in trading activity, growing institutional interest, and a series of groundbreaking product releases. However, as the platform accelerates its expansion, investors must carefully consider both its growth drivers and the increasing risks. This report explores Hyperliquid’s development, its influence on the future of on-chain trading, and assesses whether it offers a viable long-term investment in an industry marked by constant change.

Catalysts for Growth: Volume, Ecosystem, and Institutional Momentum

Hyperliquid has firmly established itself as a leader in decentralized derivatives markets. In the third quarter of 2025, it recorded an impressive $303 billion in trading activity, surpassing competitors such as Lighter and

. Its open interest (OI) was greater than the combined OI of all other perpetual decentralized exchanges, reinforcing its reputation as the primary source for on-chain liquidity . This achievement was supported by a 10.9% increase in Total Value Locked (TVL) over the quarter, reaching $5 billion, while its Hyperliquidity Provider (HLP) TVL rose from $50 million to $68 million .

Hyperliquid’s ecosystem growth has also played a crucial role. The introduction of the HyperEVM network—which now supports over 100 protocols and boasts $2 billion in TVL—has broadened the platform’s capabilities beyond just perpetual trading

. Additionally, the USDH stablecoin, launched in September 2025, is designed to lessen dependence on third-party stablecoins such as . With backing from BlackRock and Superstate reserves, is managed through Stripe’s Bridge platform and has already seen $2.2 million in trading volume on its USDH/USDC pair . These moves are part of a larger vision to build a self-reliant financial ecosystem.

Institutional participation is further fueling growth. The recent filing by 21Shares for a Hyperliquid ETF reflects rising confidence in the platform’s governance and economic framework

. Industry experts such as Patrick Scott from Coindesk believe that Hyperliquid’s ability to generate revenue and diversify its ecosystem positions it for continued expansion, even as it contends with rivals like Aster and edgeX .

Risks: Regulatory Scrutiny, Technical Vulnerabilities, and Market Volatility

Despite its

, Hyperliquid must contend with several significant obstacles. Regulatory uncertainty is a major concern. The platform’s proprietary Layer 1 blockchain and closed-source software have attracted criticism from security organizations like DeFiSafety, which rated it poorly at 7% due to limited audits and transparency issues . Its lack of KYC requirements, while appealing to privacy-minded users, could conflict with tightening regulations in regions such as the EU and United States.

Technical risks add further complexity. With only 16 validators, Hyperliquid faces questions about its level of decentralization. Reports indicate that if 11 validators were compromised, unauthorized transactions could occur

. A recent incident involving $15.16 million in forced liquidations also exposed the dangers associated with high-leverage trading on the platform .

Market instability is another challenge. The HYPE token, which governs Hyperliquid, is subject to significant price swings, with its value closely linked to TVL and user growth. The HIP-3 model, which enables permissionless market creation and requires HYPE staking, encourages ecosystem expansion but also introduces a “supply sink” that could impact token liquidity

.

Investment Potential: Balancing Innovation and Caution

For those considering investment, Hyperliquid presents a high-conviction prospect. Its dominance in decentralized perpetual markets, along with strategic moves into stablecoins and EVM-compatible infrastructure, points to a platform with strong potential for ongoing innovation. The USDH stablecoin, in particular, could become a foundational asset for on-chain finance, offering a native and regulated solution that aligns with international frameworks like the GENIUS Act and MiCA

.

Nevertheless, the risks are substantial. Regulatory oversight is intensifying across the digital asset sector, and Hyperliquid’s technical setup may need considerable upgrades to satisfy compliance standards. Investors should also factor in the competitive environment: platforms such as Aster on the

Chain are rapidly gaining ground, with daily perpetual trading volumes approaching $30 billion .

Patrick Scott from Coindesk highlights that Hyperliquid’s 62% share of

DEX open interest remains a key strength, but maintaining this lead will require effectively managing systemic risks and adapting to regulatory developments . At present, the platform’s robust revenue streams and diverse ecosystem make it an attractive, though high-risk, investment option.

Conclusion

Hyperliquid’s ascent in 2025 highlights the disruptive power of decentralized trading platforms. Its dominance in the market, continuous product development, and appeal to institutional players are clear growth drivers. However, the journey ahead is complicated by regulatory, technical, and market-related risks. Investors must thoroughly assess these dynamics, weighing the promise of innovation against the inherent volatility and rapid evolution of the sector.

As the cryptocurrency industry continues to mature, Hyperliquid’s success will depend on its ability to navigate these challenges—determining whether it becomes a transformative leader or a cautionary example.