HYPE: Why I'm Both Excited and Terrified
A $7 billion airdrop. A perpetuals exchange that came out of nowhere. And a controversial bet that's either genius or madness.
I've been in crypto long enough to be skeptical of anything that seems too good to be true.
So when Hyperliquid airdropped $7 billion worth of tokens to its users in November, my first instinct was to dismiss it as just another crypto sugar rush.
I was wrong.
What's unfolding here is far more fascinating — and potentially concerning — than a typical token launch.
Let me explain why I think Hyperliquid might be either the most brilliant or the most reckless experiment in crypto history.
The perfect launch... almost too perfect
Here's what keeps me up at night: How did a perpetuals exchange come out of nowhere to execute what might be the most successful token launch we've ever seen?
But unlike many crypto pumps, this one actually has substance behind it.
I've spent countless hours trading on various DEXs, and I have to admit — Hyperliquid's product is pretty cool.
While other platforms feel like clunky science experiments, trading on Hyperliquid feels like using Binance or FTX in their prime.
The secret? They chose centralisation where it matters.
A controversial trade-off
This is where things get interesting — and controversial. Hyperliquid made a calculated bet: sacrifice some decentralisation for a superior user experience. Their closed-source codebase and limited validator set (just 16) would make crypto purists cringe, but it allows them to process 100,000 orders per second.
For comparison, that's several orders of magnitude faster than competitors like GMX or dYdX. It's not even a fair fight.
It just works. No gas fees for trades. No slippage headaches. No order book manipulation. It's what DeFi always promised but rarely delivered.
This is what they have to say:
But here's where I think the real genius lies — and it's not technical.
Most crypto projects bend over backwards to accommodate venture capitalists. Hyperliquid did the opposite. They completely excluded VCs from their token launch, forcing them to buy on the open market like everyone else.
This might sound like a minor detail, but it's revolutionary. By making VCs compete with retail traders, they created what Synthetix founder Kain Warwick calls an "egalitarian" distribution.
I'd call it brilliant market psychology.
Think about it: When VCs get preferential access, they typically dump on retail. But when they have to buy alongside everyone else? They become your most powerful allies in pushing the price up.
The North Korean elephant in the room
Now for the part that terrifies me.
In late December, security researchers spotted North Korean hackers "testing" the platform.
The Lazarus Group, North Korea's infamous cyber army, stole $1.3 billion in crypto last year alone.
This is where Hyperliquid's centralisation becomes a double-edged sword. With only 16 validators, a sophisticated attack could be catastrophic. It's like running a multinational bank out of a single branch office — efficient, sure, but vulnerable.
And it gets worse. Imagine being responsible for securing billions in assets without understanding the security system. It's a disaster waiting to happen.
The ANIME plot twist
Just recently, Hyperliquid announced that HYPE stakers will receive an airdrop of ANIME tokens from Azuki's new project.
The market loved it — HYPE jumped 13%.
But I see this differently. It feels like a distraction from the real challenges ahead. Hyperliquid needs to transform from a successful perpetuals exchange into a full-fledeted layer-1 ecosystem. Airdrops and partnerships are nice, but they don't solve the fundamental challenge.
The HyperEVM gambit
This brings us to Hyperliquid's next big bet: HyperEVM. They're trying to make their network Ethereum-compatible, with 35 teams allegedly ready to deploy applications.
I'm skeptical. Building a developer ecosystem isn't just about technical compatibility — it's about trust. Will developers bet their projects on a centralised, closed-source platform? More importantly, should they?
VanEck's recent research note hit the nail on the head: without a robust developer community, HYPE's $25 billion valuation starts looking shaky. They called it "another Icarian tale about crypto hubris." I fear they might be right.
So where does this leave us?
I see three possible futures for Hyperliquid:
The Success Story: They manage to maintain their performance edge while gradually decentralizing. HyperEVM attracts developers, and they become crypto's go-to trading layer.
The Compromise: They settle into a niche as the fastest, most centralized trading platform in crypto. Valuable, but not the revolutionary force they aspire to be.
The Cautionary Tale: Security issues or developer apathy cause the ecosystem to unravel, leaving HYPE holders with expensive bags of "what if."
The validator wake-up call
What worries me most is the validator situation. Last week, validator firm employee Kam Benbrik exposed how most validators operate as a black box, unable to understand or audit the system they're supposed to secure.
Hyperliquid dismissed these concerns as "misconceptions," but I'm not convinced. In traditional finance, we'd never accept a bank operating with such opacity. Why should we accept it in crypto?
The decentralisation paradox
Here's the fascinating paradox at the heart of Hyperliquid: their success comes from being less decentralised than competitors, but their future depends on becoming more decentralised.
It's like they're trying to transform a highly efficient dictatorship into a democracy without losing the efficiency.
History suggests this rarely ends well.
Looking Ahead: My Take
Despite my concerns, I can't help but be impressed by what Hyperliquid has achieved. They've built a product that traders actually want to use, executed a token launch that will be studied for years, and maintained momentum where others have faltered.
The ANIME airdrop announced today shows they understand the importance of keeping the community engaged. But airdrops are easy — the hard part lies ahead.
Hyperliquid represents everything exciting and terrifying about crypto. They're pushing boundaries, challenging assumptions, and creating enormous value — while also accumulating enormous risk.
They've proven they can build a better mousetrap. Now they need to prove they can build a better ecosystem. And in crypto, that's often the harder part.
I remain cautiously optimistic, but with one eye firmly on the exits. Because in this industry, the line between genius and hubris is often visible only in hindsight.
What do you think? Am I too optimistic? Too paranoid? Let me know your thoughts on crypto's most fascinating experiment.
Buttercup Picks: The Good Reads
How Hyperliquid’s insanely lucrative airdrop launch changed the game - by Tom Mitchelhill, Cointelegraph, January 8, 2025
Does HYPE Need Help? 🚨 - by Token Dispatch, December 24, 2024
We need to stop pretending that airdrops work - by Andrew Redden,
Blockworks, September 13, 2024
Why 2025 Will See the Comeback of the ICO - By Ryan Zurrer, CoinDesk, Dec 26, 2024