In less than a year, Hyperliquid captured nearly 10% of BTC and ETH perp volume. It has even surpassed DeFi rivals and is now challenging CEXs.

Despite unmatched growth and revenues, HYPE trades at deep discounts to Solana and Ethereum, which has sparked debate over whether it’s severely undervalued.

HYPE: The Underdog?

Hyperliquid brought in $409 million in user fees in the last six months. This accounts for 23% more than Ethereum and 75% more than Solana. Yet, its token HYPE trades at an 88% discount to ETH and a 62% discount to SOL on a fully diluted basis.

Experts at “The DeFi Report” point to a combination of product strength, unique tokenomics, and growing market share as reasons the gap may not hold for long.

Unlike many crypto projects, Hyperliquid launched without venture capital involvement, excluding VCs and angels from the token allocation. Instead, it distributed 31% of the supply to early users at genesis, worth $1.2 billion at the time and now valued at $4.7 billion. The move turned traders into stakeholders and avoided the selling pressure typically caused by VC unlock cycles.

In addition, the project set aside a 6% foundation budget to fund operations and directed user fees into an Assistance Fund that buys HYPE from the open market. This reduces token float and supports price discovery.

Hyperliquid’s core product is a high-throughput, on-chain central limit order book offering perpetuals and spot trading. It provides sub-second block times, low fees, and a self-custody trading experience. Such a system replicates the feel of a centralized exchange but with DeFi transparency.

Trading activity is at an all-time high, with daily volumes of $10-$20 billion and $13 billion in open interest across assets, giving the platform roughly 9-11% of global BTC and ETH perps volume. Hyperliquid generated $107 million in fees in the last 30 days, which is well above Solana’s $40 million and Ethereum’s $67 million.

Nearly all revenue is funneled into token buybacks. The report found that in July alone, $92.2 million in fees led to $90.2 million of HYPE being repurchased. Analysts say this creates a form of “buyback yield” that accrues directly to holders, unlike traditional fintech or tech valuations where revenues sit with companies.

Expansion has also played a role in the project’s growing profile. Hyperliquid has moved beyond being just a perpetuals DEX into developing its own Layer 1 ecosystem. For instance, its HyperEVM allows developers to build against deep liquidity on the protocol’s order books without needing to run their own exchanges. This strategy, combined with integrations across wallets such as Phantom, Rabby, and Rainbow, as well as lending and bridging products like Hyperlend and Unit Protocol, has widened its reach and strengthened network effects.

On an annualized basis, Hyperliquid has processed $1.95 trillion in volume, more than its decentralized competitors combined. Its BTC and ETH open interest represents 32% of CME’s and 7.6% of the total across both crypto-native exchanges and CME.

Mounting Risks

Risks remain, especially with growing competition from Coinbase and Robinhood, reliance on a small validator set, and questions about sustainability, given that a relatively small number of active traders generate most of the revenues.

Even so, with HYPE trading at a $48 billion fully diluted valuation and $16 billion in circulating supply, analysts note that its buyback-driven model and market penetration suggest the token remains undervalued compared to Solana and Ethereum.