Hyperliquid has continued to build its commanding position in the perpetual protocol market, reaching nearly 70% market share in recent weeks, a significant climb from its position in early 2024. For context, perpetual futures (or "perps") are derivative contracts that allow traders to speculate on asset prices without an expiration date, combining features of futures contracts with spot trading flexibility.
Unlike traditional futures, perps maintain exposure through a funding rate mechanism that periodically transfers value between long and short positions to keep prices aligned with the underlying asset.
The protocol's trading volume has shown strong momentum, processing $175 billion in March alone, with April already reaching $83 billion at the halfway point. When comparing Hyperliquid's volume to that of traditional centralized exchange giant Binance, the ratio has climbed to nearly 10%, indicating the growing adoption of decentralized derivatives trading. This growth trajectory suggests a gradual shift in increased preference toward on-chain perpetual solutions that have increased accessibility.
The chart reveals a consistent upward trend for Hyperliquid since April 2024, with competing protocols like Jupiter, GMX, and Vertex Edge maintaining smaller but stable portions of the market. This concentration pattern often emerges in maturing markets where network effects and liquidity advantages compound for leading protocols.
Perpetual futures may find greater onchain traction than spot trading due to several structural advantages. Perpetual contracts enable leverage, allowing traders to amplify positions without the capital requirements of fully-funded spot trades, making these platforms attractive to sophisticated traders.
The non-custodial nature of onchain perps addresses concerns about exchange insolvency plaguing centralized platforms while still providing the trading instruments active traders demand. Additionally, the automated execution of positions through smart contracts eliminates potential settlement issues that can occur on centralized venues during extreme market volatility.
This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.
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