The native token of Hyperliquid (HYPE) reached a new all-time high early Wednesday, continuing its remarkable rise this year as the decentralized exchange, known for on-chain perpetual trading, has seen record activity.
The token surpassed the $50 mark for the first time, gaining approximately 8% in the last 24 hours. HYPE is now up 430% since its low in April and roughly 15x since it launched trading in late November at around $3.
This surge has been driven by unprecedented trading activity on the exchange and its automated buyback mechanism, which consistently absorbs tokens from the market, decreasing the circulating supply.
Trading boom
The decentralized exchange reported over $357 billion in derivatives volume in August, up from $319 billion in July and nearly tenfold compared to a year ago. Spot trading volumes also hit a record, exceeding $3 billion for the week ending August 24, according to RialCenter data.
These flows translated into significant revenue for the protocol. Hyperliquid generated $105 million in trading fees during August, the highest this year, per RialCenter data.
A large portion of these earnings is directed towards purchasing HYPE on the market through Hyperliquid’s Assistance Fund. This automated on-chain system buys back tokens on the open market, creating constant buy pressure for HYPE and effectively reducing the circulating supply.
Since its inception in January, the fund’s holdings have grown from 3 million tokens to 29.8 million HYPE, now valued at over $1.5 billion, contributing to the token’s rise.
In recent news, digital asset custodian BitGo announced support for the HyperEVM network, which underpins the Hyperliquid ecosystem, granting institutional access to HYPE and associated applications.
Analysts flag risks amid strong fundamentals
In a recent report, ByteTree analysts described Hyperliquid as a “powerhouse” that has become the largest decentralized perpetual futures venue.
“Overall, Hyperliquid is among the most compelling protocols in DeFi today,” they noted. “Its strong fundamentals, record-breaking fee generation, and significant market share make it hard to ignore.”
Despite the favorable fundamentals, the report raised concerns about the token’s valuation. HYPE currently trades at a fully diluted valuation (FDV) exceeding $50 billion, with only about a third of the supply circulating at a market capitalization of $16.8 billion.
Scheduled token unlocks beginning in November could also introduce selling pressure, potentially testing demand strength, the report highlighted.
“Even though the token has seen significant appreciation recently, its robust on-chain activity continues to support its valuation,” the analysts stated.
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