The market capitalization of the top MEME coins exceeds one hundred million dollars. Will Hyperliquid, an L1 public chain focused on derivative trading, become the new gold mine for MEME?

Author: Frank, PANews

Recently, the MEME coin on the Layer1 public chain Hyperliquid has caught the attention of players. The project with the highest market cap, PURR, has a market cap exceeding $110 million, a figure that not only surpasses most MEME coins on public chains but also ranks in the top ten of the MEME rankings on the Solana chain. In addition to PURR, there are two other MEME coins on the Hyperliquid chain with market caps exceeding $20 million.

The emergence of these potential projects raises the question of whether this new generation L1 is becoming a new MEME blue ocean market. However, for Hyperliquid, MEME seems far from their true goal.

A Latecomer L1 Claims to Build the Fastest Public Chain in the World

It is not easy to clarify Hyperliquid's positioning at first glance. The homepage of its official website states: Hyperliquid is a decentralized perpetual exchange, while its documentation mentions: Hyperliquid is a high-performance L1 optimized from the ground up. This is not due to negligence but reflects Hyperliquid's two roles.

Hyperliquid's founder, Jeff Yan, previously founded Chameleon Trading, a cryptocurrency high-frequency trading company ranked in the top ten by trading volume. Most of the team members at Hyperliquid also come from Chameleon Trading. For a team with ample experience in high-frequency contract trading, Hyperliquid's initial goal was not to build a public chain but to "create a decentralized Binance."

Therefore, Hyperliquid's initial product was a decentralized perpetual exchange. As business volume increased, Hyperliquid believed that "the only way to build a scalable perps DEX is to start from scratch with an L1."

Focusing on the demand for on-chain high-frequency trading, Hyperliquid shifted towards L1 construction and categorized the DEX as the flagship product of this L1. Currently, the Hyperliquid L1 mainnet can support 100,000 orders per second, and according to official information, this figure is expected to increase to millions per second in the future. Even at the current rate, 100,000 TPS is still the fastest among all public chains.

"Most L1s build infrastructure and hope others will create killer applications. Hyperliquid takes the opposite approach: first refine local applications, then develop into a general infrastructure," Jeff Yan explained Hyperliquid's strategic thinking on social media.

Generated $35 Million in Revenue, Points Market Cap Exceeds $200 Million

Hyperliquid has not accepted any external funding. The team stated, "This allows the team to focus on building the products they believe in without external pressure."

However, not having financing does not mean Hyperliquid lacks airdrops. Since November 2023, Hyperliquid has launched a points program that has attracted a large number of users. The platform distributes a fixed amount of points weekly, allocated based on users' trading volumes, and users who earn points can receive rewards from the platform's revenue.

As of July 25, 2024, data shows that Hyperliquid's Hyperliquidity Provider has generated a total of $34.94 million in revenue, primarily from providing liquidity, executing liquidations, and collecting platform fees. Users can deposit funds into this liquidity pool to earn returns.

This model is similar to the trading mining that was popular on various exchanges a few years ago, but the idea of trading mining remains quite popular in the community, transitioning from CEX to DEX.

In addition to the official liquidity rewards, Hyperliquid also allows the creation of personal vaults, where any user can create a personal vault (similar to an on-chain private fund), and other users can choose to deposit funds based on past trading performance. The creator then takes 10% of the profits. Of course, this type of investment is also fraught with risks; among the top ten vaults by TVL, four are showing losses. Nevertheless, this model of directly handing money to smarter individuals has still attracted considerable funds, with a fund pool achieving an annualized return of 727% attracting over $1 million.

As of now, Hyperliquid has not issued an official governance token. Points have become a potential asset for platform revenue, currently maintaining a price of around $4.4 on whales.market. According to community members, a total of 51.06 million points will be issued, and based on this quantity, the market cap of the points has already reached $224 million.

The MEME Coin Effect Has Yet to Manifest

PURR is the first native token on Hyperliquid to implement the HIP-1 standard, a MEME coin featuring a cat. This token did not undergo an initial sale; instead, 50% of the tokens were airdropped to users based on their points holdings, while the remaining 50% were added to the PURR/USDC liquidity pool. (Subsequently, at the community's suggestion, 40% of the tokens were burned.) As of July 25, PURR's market cap is approximately $110 million, making it the highest-valued token on Hyperliquid, with a price increase of about ten times since its issuance. The second highest market cap token is BIGBEN, valued at around $28.5 million, a MEME coin themed around Big Ben, which has increased by about two times since its launch.

HFUN is the token with the highest increase on Hyperliquid, with a market cap of about $25 million and a peak increase of over a hundred times. Additionally, other native tokens on the Hyperliquid chain have market caps not exceeding $10 million.

As of July 25, 2024, there are not many native tokens on the Hyperliquid chain, with only 44 trading pairs, most of which are MEME tokens. The MEME coins on Hyperliquid are still not considered a mature sector, with an on-chain 24-hour trading volume of around $10 million.

By returning all income to the community, Hyperliquid has attracted an increasing number of users to participate in platform trading. According to DeFiLlama, as of July 25, Hyperliquid's TVL is $430 million, ranking fourth in the derivatives product category, only behind GMX, Jupiter, and DYDX. Official data shows that Hyperliquid has 183,000 users, with a 24-hour trading volume of $1.5 billion.

However, this does not seem to be Hyperliquid's goal. According to a report from Protecc Labs on Hyperliquid, it believes that its true competitors are not other derivatives exchanges but Binance and the Solana chain. Hyperliquid's founder believes that "Solana and Binance have both become giants in their respective fields, providing highly attractive environments for their target audiences. Hyperliquid addresses a significant issue present on Solana, namely on-chain order books and fragmented liquidity, which require SOL as fuel for trading. At the same time, it also resolves a major issue with Binance, which is decentralization (accessing optimal products without strict KYC/AML)."

In terms of this goal, Hyperliquid has a sufficiently grand narrative, but whether this goal can be achieved still requires Hyperliquid to present more killer features.