Hyperliquid, a decentralized exchange (DEX), is redefining perpetual trading with its innovative approach to speed, transparency, and trading efficiency. Built on its proprietary HyperBFT blockchain, the platform combines the best of centralized exchange (CEX) performance with decentralized finance (DeFi) principles. This article explores its strengths, potential challenges, and how it compares to competitors like Orderly Network and LogX.
Key Strengths of Hyperliquid
1. Ultra-Low Latency and High Throughput
Hyperliquid’s standout feature is its HyperBFT consensus mechanism, enabling near-instant trade execution with a latency of just 0.2 seconds. Capable of processing up to 100,000 transactions per second, the platform delivers an unprecedented trading experience for high-frequency traders and institutional players.
2. Fully On-Chain Order Book
Unlike many DEXes that rely on off-chain components, Hyperliquid’s order book and matching engine are entirely on-chain. This approach ensures transparency, allowing users to independently verify trades while maintaining decentralization.
3. Advanced Trading Tools
Hyperliquid offers sophisticated tools that rival those of top CEXes. These include:
Leverage up to 50x.
Advanced order types such as Take Profit/Stop Loss.
Integration with TradingView for seamless charting and analysis.
4. Cost Efficiency
The platform eliminates gas fees for trades, charging only minimal fees for deposits and withdrawals. This structure is particularly attractive to high-frequency traders who value low-cost operations.
5. Community-Driven Liquidity
The Hyperliquidity Provider (HLP) program allows users to contribute liquidity and earn rewards. Additionally, the referral program incentivizes community growth, fostering a robust user base.
Challenges Facing Hyperliquid
1. Competing with Established Players
Hyperliquid faces stiff competition from market leaders like Binance and dYdX, as well as emerging platforms like Orderly Network and LogX. Convincing traders to migrate remains a key challenge.
2. Perceived Centralization
Despite its decentralized ethos, Hyperliquid’s proprietary Layer 1 raises concerns about centralization. Future plans to decentralize its infrastructure aim to address this issue but will require time to implement.
3. Retail User Accessibility
While professionals benefit from its advanced tools, new traders may find the platform’s features intimidating. Simplifying the user interface could broaden its appeal.
4. Liquidity Challenges
As a new platform, Hyperliquid must scale its liquidity to match competitors. Its innovative programs aim to attract market makers, but this remains a work in progress.
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Challenges of Hyperliquid
1. Competition from Established Players
While its features are robust, Hyperliquid competes with giants like Binance and Uniswap. Convincing users to migrate or adopt it as a primary platform remains an uphill battle, despite its speed and transparency.
2. Centralization Concerns
Despite its decentralized framework, Hyperliquid’s proprietary Layer 1 architecture raises questions about the level of centralization. Until its planned decentralization initiatives are fully realized, this may deter purist DeFi users.
3. Learning Curve for New Users
For retail traders accustomed to simpler interfaces, Hyperliquid’s advanced tools and order types may seem complicated. While these features attract professionals, they might deter casual users.
4. Scaling Liquidity
To compete effectively, Hyperliquid must ensure deep liquidity across trading pairs. As a new platform, it must actively attract market makers and trading volume to sustain its order book model.
Comparison with other leading Perps platforms
Here’s a comparison with other leading platforms like dydx, logx and aevo
Key Metric
Hyperliquid
dYdX
LogX
Aevo
Execution Speed
0.2s latency, 100,000 TPS via HyperBFT
~1s latency (StarkEx L2), moving to Cosmos
100ms latency on Layer-2
Low latency via Layer-2 (EVM-compatible)
Liquidity Source
Decentralized liquidity pools
Robust DEX liquidity pools
Aggregated from CEXs like Binance and Coinbase
Decentralized liquidity pools
Trading Volume
Over $1B daily volume
$331M+ daily volume
Volume spread across integrated networks
Specialized in derivatives; lower overall volume
Transaction Costs
Gasless trading for orders, minimal withdrawal fees
Gas costs on StarkEx Layer-2
Gasless trading via $LOGX subsidies
Low costs on Layer-2
Product Specialization
Perpetual swaps, professional-grade tools
Perpetual swaps, margin trading
Cross-chain interoperability, infinite liquidity
Perpetuals and options
Strength
Ultra-low latency, fully on-chain order book
Proven track record, massive community
Deep liquidity from CEX aggregation
Derivatives-focused innovation
Challenge
Centralization concerns, liquidity scaling
Migration risks, UI complexity
Dependence on CEX liquidity
Niche product appeal, competitive space
Ready to Experience High-Speed Trading on Hyperliquid?
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The crypto bull run is gaining momentum, with all eyes on Bitcoin. However, memecoins are stealing attention, boosting the Solana ecosystem. Memecoins are popular for onboarding new users, as they promise quick or life-changing gains. The thrill of trading them feels like a casino rush, driving their appeal.
Traditionally, bull runs start with money flowing into Bitcoin, then large-cap altcoins, small caps, and finally memecoins and NFTs. This time, it’s different. The run began with Bitcoin, followed by a mix of last cycle’s large caps (Algorand, XRP, Cardano) and memecoins.
While the Base ecosystem seemed ready to lead the memecoin mania, Solana overtook it with the success of PumpFun.
Many crypto “influencers” are even speculating that a utility coin-driven bull run might not materialize this cycle, casting doubt on Ethereum’s potential for significant gains. As we know, smart money often accumulates undervalued or less visible coins with strong narratives and high success potential. Whenever a coin is being shilled on twitter or Youtube, it’s very important to do an extensive research and assess if it’s too late to get in.
Comparing Ethereum and Solana
Let’s compare Ethereum and Solana ecosystems to understand wether Ethereum is underperforming:
As of 20 November 2024
Price
FDV
Volume (24h)
Circulating supply
TVL
Ethereum
3100$
373b
28b
120M
59b
Solana
234$
111b
6.9b
474M
8b
We can see that Solana has approximately four times more tokens in circulation than Ethereum. If Solana had four times fewer tokens in circulation to match Ethereum’s supply, its price could be closer to $1,000 (474/120×234=924$). When considering the supply factor, we can see that Ethereum is around 3 times more expensive than Solana (3100 vs 924).
Let’s see if Ethereum’s performance justifies being 3 times more expensive than Solana.
Performance comparison
Latest revenu
Highest revenu
Transactions
Ethereum
Around 3M per day
Around 203M per day (2022)
Around 1M per day
Solana
Around 5M per day
Around 5.5M per day (2024)
Around 51M per day
If we compare the total value locked, we can see that it is 7 times higher on Ethereum than on Solana. This suggests that Ethereum is viewed as a more trusted chain, where institutions prefer to park assets with fewer transactions but larger amounts. The total value locked will increase rapidly as Ethereum gains in value.
The number of transactions on Solana is currently 51 times higher than Ethereum, however the revenue is only around 2 times higher (As of 20 november 2024 – with all the memecoin mania). While this cements Solana as a leader in transaction throughput, we can view this differently as it takes much more effort on Solana to produce the same revenue. We are also not taking into account all the bundled transactions that are validated on Ethereum through the different Layer2 solutions.
Another factor to consider is that Ethereum set a record revenue of $203 million in a single day in 2022, according to DeFiLlama. While this level of revenue may not be repeated anytime soon—especially with the Dencun upgrade and fee adjustments—it sets a significant milestone for Ethereum’s potential compared to Solana.
Memecoin mania
The memecoin mania will likely shift to other blockchains, particularly Ethereum L2s, as they attract fresh users with lower fees and faster transactions. However, this hype will probably fade toward the end of the bull run. Solana will face significant competition for memecoins in the short term and will need to pivot to new narratives, such as AI, to maintain its performance edge. While it’s likely that the memecoin craze will end with many investors losing money and realizing they were shilled on, the overall hype will eventually subside. This gives a direct strategic advantage to Ethereum.
Both Ethereum and Solana are strong projects that are likely to perform well during the bull run. However, it’s important to understand that the capital flowing into crypto can’t chase all projects at once. Money will rotate between different projects, selecting winners and losers, and shifting narratives multiple times along the way. Investors will aim to profit from the highs and lows of each rotation, ultimately exiting when the bull market begins to fade.
This is why it’s crucial not to fall for narratives or become emotionally attached to a project. Conducting your own research is essential to understand why certain narratives are being pushed and fed to you daily, often obscuring other potential opportunities.
In this article, we will go over the concepts of liquidity layer and explore what differentiates Elixir.
Price discovery in liquidity pools
Decentralized exchanges use an automated market maker (AMM) model to facilitate trades. Instead of relying on order books, users trade against liquidity pools that contain reserves of various tokens. These pools are automated by smart contracts, adjusting token prices based on supply and demand.
For pools with low liquidity, this can be problematic since a large trade can affect the supply and demand metric of that specific pool, while the price of that token remains stable on the overall market. This phenomenon is known as “slippage”. Slippage occurs when a trade is executed for a larger size than the liquidity available in the pool. In such cases, the price of the token can deviate from the market price as the trade absorbs the available liquidity in the pool. So a token price can vary from a pool to another and it creates arbitrage opportunities. Traders monitor different pool and can buy low on a platform and sell high on another, which will stabilize the price across the platforms.
Prevention mechanisms
Decentralized exchanges such as Uniswap implement a constant product market maker mechanism. This ensures that the tokens pair quantities in a liquidity pool stays consistent. Consequently, when the price of one token rises from increased demand, its pool quantity decreases while the other token’s quantity rises. This regulates the price automatically. Other mechanisms include offering incentives for providing liquidity, multiple pools for the same pairs and advanced trading features like limit orders.
While these methods assist in reducing the impact of slippage to a certain degree, decentralized exchanges still face some challenges in offering liquidity and price stability compared to centralized exchanges. Traders and liquidity providers must assess these aspects before engaging in trading and providing liquidity on DEXes.
Aggregation Platforms
Various platforms like 1inch consolidate liquidity from multiple DEXes and liquidity pools, enabling traders to tap into increased liquidity and potentially reduce slippage by dividing orders among various providers.
While these platforms helps users automatically find the best prices the basic problem remains low liquidity.
Elixir liquidity layer
Elixir is a DeFi protocol that specializes in offering an infrastructure for liquidity provision and management. What differentiates Elixir from other liquidity layers such as Uniswap is its dynamic liquidity provision model. Elixir focuses on efficiency and optimization. The protocol dynamically adjusts rewards based on market conditions and liquidity needs, incentivizing liquidity provision where it’s most needed. By dynamically adjusting rewards and liquidity allocations, the protocol aims to maximize liquidity utilization and improve overall market efficiency. Elixir is natively integrated with many leading decentralized exchanges and orderbook exchanges.
Currently, Elixir have an airdrop program where you earn potions for providing liquidity. You can provide liquidity on ethereum mainnet or on arbitrum/SUI by using their native integration with dexes.
Here’s the documentation, make sure to understand all the risks included in supplying liquidity as many layers of smart contracts are involved.
Fee optimization is a very important part of your crypto journey. Before doing a transaction, it is important to explore all possible ways and choose the strategy that minimizes the fees. This applies to on chain and off chain transactions.
Let’s say for example you want to transfer a given asset from Exchange A to Exchange B. Each exchange has a withdrawal fee, a deposit fee and sometimes a minimum amount that can be withdrawn. In some cases it could be cheaper to sell the token in one exchange for USD and buy it on the other exchange so you don’t lose your position. While this might be tempting, if there’s any capital gain, you will be imposed and pay taxes on it. So you have to be extremely careful and consult with your tax advisor before doing any alienation of assets.
Example
For the following example we suppose it’s cheaper to buy USDC on Coinbase centralized exchange than buying it on MEXC. You need your liquidity on MEXC because it offers a wider variety of coins. In this scenario, it is better to buy USDC on Coinbase and send it to MEXC. We will walk through the steps.
Receiving wallet
First, in your MEXC wallet, navigate to deposit and choose USDC. Then select a network that has low network fees, For example Polygon(MATIC), Once your address is ready, copy it.
Sending wallet
In your Coinbase application, navigate to your USDC account, click on send. You will be prompted to choose a network. Ethereum has the highest fee, and the rest usually have a very low fee, but as of today it is free. It’s probably a promotion from Coinbase because they encourage the usage of USDC since they are early backers of the Circle project.
Make sure you choose the same network that you selected in MEXC, double check that you are sending USDC using MATIC and enter your MEXC address.
You will receive your funds in a few minutes. In MEXC, since most crypto are paired with USDT, you can convert your USDC to USDT for a negligible fee.
Don’t forget, It is always wise to send a small amount first to make sure you receive it correctly before sending the desired amount.
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