Hyperliquid HIP-3 Launch: A Key Step in Building On-Chain Financial Infrastructure

Recently, the HIP-3 improvement proposal launched by the Hyperliquid protocol has attracted widespread attention in the field of Decentralized Finance, with its minimally viable version now live on the Testnet. This is not just a simple protocol upgrade; it represents a key step in Hyperliquid's development roadmap and may have a profound impact on the future of on-chain derivatives trading.

To fully understand the importance of HIP-3, we need to first grasp the overall design philosophy of Hyperliquid, starting from its three core proposals.

Hyperliquid has built a layered and fully functional financial ecosystem through three key improvement proposals.

HIP-1 aims to solve the difficulties of listing new projects on exchanges. For a long time, project teams have faced opaque, high-cost, and stringent conditions when listing on mainstream trading platforms. HIP-1 allows anyone to create new tokens on Hyperliquid without permission, simply by paying a certain fee to automatically open a spot order book market, significantly lowering the threshold for assets to enter the public market.

HIP-2 solves the liquidity cold start problem after the launch of new tokens. Known as "Hyperliquidity," HIP-2 is a protocol-native automated liquidity strategy that provides foundational tradable liquidity for new markets, effectively addressing the liquidity issues in the early stages of new asset launches.

HIP-3, also known as "Builder-Deployed Perpetuals", completely opens up the creation rights of the perpetual contract market. Any "builder" can deploy custom perpetual contracts on Hyperliquid by staking 1,000,000 HYPE. Builders have full control over the markets they deploy, can independently define various key parameters, and enjoy 50% of the trading fees from that market.

After completing these three steps, Hyperliquid has transformed from a decentralized trading platform solely focused on end-users to a "financial infrastructure layer," giving rise to a new commercial ecosystem and gameplay.

The high entry threshold of HIP-3 is essentially a screening mechanism that ensures only well-capitalized and serious players can participate. These financially strong institutions may target markets in traditional finance that are characterized by large and stable trading volumes and substantial value, such as major global stock indices, commodities, and major foreign exchange currency pairs.

Taking the world's leading S&P 500 index futures contracts as an example, even if one only captures 0.1% of the existing trading volume, the builder's daily income can reach $256,000 based on a 0.1% fee rate. This is undoubtedly a huge attraction for institutions seeking stable returns.

In addition, the modular design of HIP-3 allows physical assets with different attributes to be more securely and efficiently introduced on-chain, echoing the architectural design of other Decentralized Finance protocols.

The launch of HIP-3 also creates opportunities for a new token ecosystem. The community may develop aggregator protocols to address the challenge of ordinary users being unable to stake 1 million HYPE individually, while also providing initial liquidity for new markets. This could trigger a "Hyperliquid War" similar to the "Curve War," further expanding the application scenarios and market demand for HYPE.

Hyperliquid also has advantages in meeting the needs of private placement stock trading for unlisted companies. The combination of HIP-3 and Hyperps enables anyone to deploy perpetual contracts for popular private placement stocks in a "self-service" manner, providing retail investors with the opportunity to gain from the price fluctuations of these companies, while also offering important price discovery functions.

In response to the challenge posed by traditional centralized exchanges offering futures trading services, Hyperliquid leverages its agility and innovative capabilities. HIP-3 will transform the contract market into a "permissionless" environment, further enhancing the speed of responding to market demands, a flexibility that centralized exchanges find hard to match.

Overall, HIP-3 represents an important leap in the development of Hyperliquid. It is not only a technological upgrade but also a strategic choice aimed at positioning itself as a core financial infrastructure that connects real-world assets, fosters an innovative ecosystem around HYPE, and agilely responds to market demands, promoting the deep integration of Decentralized Finance and traditional finance.

Despite the many challenges ahead, such as effectively guiding liquidity in new markets and dealing with a complex global regulatory environment, HIP-3 undoubtedly paints a picture of a more open, composable, and imaginative future for on-chain finance.