Hyperliquid: A Layer 1 Built for Trading
HyperCore, HyperEVM, onchain order book, USDC deposits, the HYPE token, the HLP vault and fees: understand Hyperliquid and its risks before using it.
The essentials
What is Hyperliquid?
Most decentralized exchanges (DEXs) are applications deployed on an existing blockchain, such as Ethereum or Arbitrum. Hyperliquid made the opposite choice: build its own blockchain, optimized for one main use, trading assets and derivative contracts.
The official documentation presents the project as an L1 aiming for an "open financial system, fully onchain." In concrete terms, the chain is split into two parts that share the same state and the same consensus:
- HyperCore, the native trading layer;
- HyperEVM, the smart-contract environment compatible with the EVM (the Ethereum Virtual Machine).
The consensus is called HyperBFT. According to the documentation, it is inspired by the HotStuff algorithm and its successors. "BFT" stands for Byzantine fault tolerance: the network keeps working properly as long as a qualified majority of validators remains honest.
HyperCore: a fully onchain order book
The principle
On a centralized exchange, the order book (the list of buy and sell offers at each price) is stored on the company's servers. You only see what it shows you.
On HyperCore, every order, every cancellation, every execution and every liquidation is an operation recorded on the blockchain. The documentation states one-block finality (once the block is validated, the operation can no longer be reversed) and an advertised capacity of 200,000 orders per second.
HyperCore offers:
- perpetual contracts ("perps"), futures contracts with no expiry date that let you trade with leverage;
- spot markets, where you trade assets directly.
What this changes for you
The main advantage is transparency: transaction history, positions and liquidations are publicly verifiable. You also keep control of your funds through your own wallet, with no account opened at an intermediary.
The flip side: your positions and your address are public. Anyone can follow a wallet's activity, which raises a privacy question not to be overlooked.
To understand the differences between this model and perpetuals DEXs based on liquidity pools, see our guide on the order book versus AMMs.
HyperEVM: smart contracts
HyperEVM lets you deploy smart contracts as on Ethereum. Developers can thus build applications (lending, swaps, vaults...) that rely on HyperCore's liquidity.
A few reference points from the documentation:
- the chain ID is 999;
- the token used to pay gas (computation fees) on HyperEVM is HYPE;
- HyperEVM uses two types of blocks: small fast blocks (about 1 second) and larger slower blocks (about 1 minute) for heavier operations.
You can transfer assets between your spot balance on HyperCore and HyperEVM via the interface ("Transfer to/from EVM"). Each direction of transfer costs a little gas in HYPE.
In practice, to add HyperEVM to a wallet like Rabby or MetaMask, always check the network settings from the official documentation, never from a link received in a private message.
Depositing USDC: how it works
On HyperCore, the reference currency for perp margin is USDC, a dollar-backed stablecoin issued by Circle. The documentation specifies that USDC is now issued natively on Hyperliquid, and that transfers from Arbitrum go through Circle's cross-chain transfer protocol (CCTP). The old Arbitrum bridge remains in service but, according to the documentation, represents only a small share of the USDC on HyperCore.
The rules to know
According to the official FAQ:
- with a connected wallet, deposits are made in USDC on Arbitrum;
- with an email login, deposits are accepted in USDC on Arbitrum, Base, Ethereum and Polygon;
- a deposit below 5 USDC is not credited; with a connected wallet, it is lost;
- an asset other than USDC, or USDC sent on an unsupported network, is not credited.
These rules change: re-read the deposit page of the official interface at the time of your transaction. Withdrawals may incur small gas fees depending on the destination chain.
Checklist before a first deposit
- You access the interface via the official address, saved as a bookmark.
- You have native USDC on the right network (Arbitrum if you use a wallet).
- You have a little ETH on Arbitrum to pay the gas for the transfer.
- The amount clearly exceeds the 5 USDC minimum.
- You make a small test deposit first before a significant amount.
The HYPE token
HYPE is the chain's native token. According to the documentation, it is used to:
- secure the network, through staking with validators;
- pay network costs, notably gas on HyperEVM;
- get trading fee discounts if you stake it.
Staking HYPE
You can delegate your HYPE to one or more validators. A few key rules:
- a delegation is locked for 1 day before it can be withdrawn;
- returning funds from the staking account to your spot balance goes through a 7-day queue;
- a validator must commit 10,000 HYPE of self-delegation, locked for one year;
- there is no automatic slashing to date (no penalty taken from funds), but an underperforming validator can be "jailed" by vote and then stops receiving rewards.
The reward rate is inversely proportional to the square root of the total HYPE staked: the more HYPE is staked, the lower the per-unit yield. The documentation gives an order of magnitude of about 2.37% per year for 400 million HYPE staked, by way of illustration.
Trading fees
The schedule is tiered based on your weighted volume over a rolling 14 days. Here are the base fees (tier 0) given in the documentation:
| Market | Taker | Maker |
|---|---|---|
| Perpetuals | 0.045% | 0.015% |
| Spot | 0.070% | 0.040% |
Reminder: a taker order takes liquidity already in the book (a market order, for example), while a maker order adds liquidity (a limit order waiting to be filled).
Other useful points:
- there are seven volume tiers; spot volume counts double in the calculation;
- staking HYPE earns a discount, from 5% (over 10 HYPE) to 40% (over 500,000 HYPE);
- fees don't go to a company: according to the documentation, they are directed to the community (the HLP vault, the assistance fund and market deployers). The assistance fund converts the fees into HYPE, which is then burned.
Don't forget the funding: on perps, periodic payments are exchanged between buyers and sellers to keep the contract price close to the asset's price. It can cost more than trading fees if you hold a position for a long time.
Some crypto prop firms also offer challenges at Hyperliquid prices: see how a crypto prop firm challenge works.
The HLP vault
HLP (Hyperliquidity Provider) is a "protocol vault." According to the documentation, it:
- provides liquidity through several market-making strategies;
- carries out liquidations;
- supplies USDC in the Earn module;
- collects part of the trading fees.
Anyone can deposit USDC into it and share its profits and losses. A deposit is locked for 4 days after the last deposit made.
It is not a guaranteed savings product. HLP takes real positions, sometimes in extreme market conditions, and can lose money. The JELLY episode, described below, illustrates this.
A concrete example
Claire wants to try Hyperliquid with 200 USDC, without high leverage.
- She buys USDC on a regulated platform and withdraws it on Arbitrum to her wallet, keeping a little ETH for gas.
- She opens the official interface from her bookmark, connects her wallet, and first deposits 20 USDC. The deposit appears on HyperCore.
- She then deposits the remaining 180 USDC.
- She opens a long position on a BTC perp with 2x leverage, in isolated margin, and places a limit (maker) order to pay 0.015% instead of 0.045%. On a 400 USDC position, that is 0.06 USDC in fees instead of 0.18 USDC.
- She notes her liquidation price, watches the funding, then closes and withdraws her USDC to Arbitrum, checking the destination address.
This scenario illustrates the mechanics; it is not a recommendation. Fee amounts change depending on your tier.
Risks specific to Hyperliquid
A limited validator set
The security of a proof-of-stake chain depends on its validators. On Hyperliquid, they validate the blocks, but also, as the JELLY episode showed, can vote on governance decisions that have a direct effect on markets. The narrower and less independent the validator set, the higher the risk of discretionary decisions or collusion.
Bridge and infrastructure risk
USDC reaches HyperCore via CCTP or via the old Arbitrum bridge, which exposes you to the issuer's risk (Circle) and to that of the bridge contracts. Bridges have historically been a major target for hacks. Our guide on bridges details these risks.
Market manipulation: the JELLY episode
In late March 2025, according to CoinDesk, a trader manipulated the price of the JELLYJELLY token, an illiquid memecoin, by combining a short position on Hyperliquid with massive purchases on DEXs. His position was liquidated and taken over by the HLP vault, which showed an unrealized loss that peaked at about $13.5 million.
The validator set met and voted to delist the JELLY perps. Positions were closed at a price set by the platform, well below the one shown by DEX oracles. The Hyper Foundation committed to compensating users, with the exception of flagged addresses.
Two lessons for the user:
- illiquid token markets can be manipulated, and the HLP vault bears the risk;
- validators have the ability to intervene in a market, which protects in some cases but is also a discretionary power.
Leverage
The most common risk remains the trader's own: high leverage turns a small price move into a liquidation. See our guides on margin and liquidation before using leverage.
Mistakes to avoid
- Depositing less than 5 USDC or the wrong asset: the funds can be lost.
- Sending from the wrong network: check that it is USDC on Arbitrum with a connected wallet.
- Clicking on a fake interface: use a bookmark, beware of ads and links sent in private messages.
- Signing without reading: a malicious signature can drain your wallet. Read our guide on phishing and drainers.
- Confusing HLP with savings: the vault can lose money and locks your funds for 4 days.
- Forgetting the 7-day queue to recover staked HYPE.
- Trading small caps with leverage: these are the markets most exposed to manipulation and cascading liquidations.
- Ignoring the public dimension: your positions are visible to everyone.
This article is general information and is not investment, legal or tax advice.
Frequently asked questions
What is Hyperliquid?
A layer 1 blockchain built for trading: its perpetual and spot order books run fully onchain in HyperCore, alongside HyperEVM, an Ethereum-compatible environment.
How do I deposit funds on Hyperliquid?
With a wallet, you deposit USDC from Arbitrum. Any deposit below 5 USDC is lost: check the minimum amount before sending.
What are Hyperliquid's trading fees?
At the base tier, 0.045% taker and 0.015% maker on perpetuals, 0.070% and 0.040% on spot, then lower fees depending on volume. Funding comes on top for perpetual positions.
What is the HLP vault?
A vault that shares its profits and losses with depositors, with a 4-day lock-up. The JELLY episode showed it can suffer heavy unrealized losses.
Key takeaways
- Hyperliquid is an L1 dedicated to trading: HyperCore runs perp and spot order books fully onchain, HyperEVM adds smart contracts.
- With a wallet, you deposit USDC on Arbitrum; any deposit below 5 USDC is lost.
- HYPE is used for staking, gas and fee discounts; unstaking takes 7 days.
- Base perp fees are 0.045% for taker and 0.015% for maker, tiered by volume.
- The HLP vault shares profits and losses, with a 4-day lock; the JELLY episode showed it can suffer heavy unrealized losses.
- The main risks are leverage, manipulation of illiquid markets, validator power and bridges.