HIP-3, Hyperliquid's permissionless framework enabling builders to deploy perpetual markets, has rapidly evolved from a marginal feature to a dominant force on the exchange—now representing approximately 50% of daily perpetual trading volume. At the start of 2024, HIP-3 accounted for just around 2% of total perp volume on Hyperliquid, but its share has surged in tandem with growing retail interest in onchain equity exposure.
The category is led by TradeXYZ, which operates synthetic perpetual contracts tracking major equities and indices—including XYZ100 (a proxy for the Nasdaq-100) and single-stock perps for companies like Nvidia and Tesla. These contracts are cash-settled in stablecoins rather than actual shares, offering traders leveraged long or short positions without owning the underlying asset.
Perpetual futures’ structural advantages are fueling adoption. Unlike traditional options, perps lack expiration dates, eliminating time decay—a key pain point for retail traders. Instead, they rely on funding rate mechanisms to keep prices aligned with the underlying index or stock. This design offers a more intuitive experience for users accustomed to straightforward directional bets, avoiding the complexity of strike prices and expiry timelines inherent in options.
Another major draw is 24/7 trading availability. While traditional equities trade only during market hours, HIP-3 perpetuals allow continuous access—enabling immediate reactions to earnings reports, news events, or macro developments at any time. However, this round-the-clock access comes with caveats: there are no circuit breakers to mitigate weekend gap risks, and outside regular equity market hours, pricing relies entirely on oracle feeds and funding-rate dynamics to stay anchored to real-world values—an untested model compared to inherently 24/7 assets like Bitcoin or Ethereum.
Despite these uncertainties, early trading volumes signal strong demand for perpetual equity exposure onchain. Yet the product remains nascent, built atop traditional financial assets never intended for continuous trading—posing both opportunity and risk as the market evolves.
This article is excerpted from The Block's Data & Insights newsletter. The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.