Intercontinental Exchange (ICE), the company that owns the New York Stock Exchange, agreed on Thursday to run a regulated US market for perpetual futures, contracts that never expire, built on the crypto derivatives exchange Hyperliquid. Stan Druckenmiller said he is an investor in ICE’s partner, a startup called Trade[XYZ].
HYPE, Hyperliquid’s native token, has risen about 13% since the announcement, to near $90 on Friday afternoon.
None of the announcements reveal how much revenue Hyperliquid will earn from U.S. trading.
Much of HYPE’s value relies on a financial loop: Hyperliquid spends nearly all the trading fees it collects buying HYPE on the open market, so more trading has meant more buying. But a growing share of Hyperliquid’s volume now runs through outside firms that list their own markets, and Hyperliquid lets those firms cut its fee by 90% to win business. For anyone holding HYPE on the US news, the number that matters is how much of each trade’s fee reaches the buyback. Trade[XYZ]’s existing markets carry about 30% of Hyperliquid’s trading and pay for about 5% to 7% of that buyback.
How HYPE’s Buyback Works
Hyperliquid’s buyback mechanism continuously converts incoming trading fees into HYPE via a fixed system address. Per the project’s documentation, the HYPE held in that fund is burned, “removing the tokens permanently from the circulating and total supply.”
From Oct. 9 to Oct. 29, the fund bought 436,765 HYPE for $35.5 million, by our count from Hyperliquid’s public blockchain records.
How Outside Firms List Markets on Hyperliquid
Outside firms have been able to list markets on Hyperliquid since last year, following the introduction of “builder-deployed” perps with Hyperliquid’s HIP-3 upgrade. Trade[XYZ], the first to do so, lists perps on stocks, indexes and commodities that let traders hold leveraged positions around the clock.
An entity that lists a perp market can charge traders its own fee on top of Hyperliquid’s. For instance, Trade[XYZ] charges double Hyperliquid’s usual rate, “with 50% of those fees going to Hyperliquid” and the remaining half going to Trade[XYZ], according to its fee page.
HIP-3 market creators can also switch on what Hyperliquid calls “growth mode.” Under it, Hyperliquid’s protocol fees “are reduced by 90%,” and the listing firm’s fee shrinks with them. However, Hyperliquid excludes crypto perps and gold contracts from this discount, leaving it mostly for stocks, stock indexes, foreign exchange, and other commodities.
In the rest of the issue, subscribers get:
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- How much of the HYPE buyback Trade[XYZ]’s markets pay for today, set against their share of Hyperliquid’s trading
- What a US market could add to the buyback at different sizes and two fee settings, and why crypto contracts are the exception
- Where Hyperliquid’s core team’s unlocked tokens actually went, including October’s 3.75 million HYPE
- What HYPE’s rise appears to price in, three price ranges for HYPE, and the dated signals to watch
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