Hello alpha seeker,

It’s been an eventful week in the Hyperliquid ecosystem. 

Before we dive into the biggest developments and what they mean for our capital allocation strategy, we’ll check out some key numbers as usual.

Lots of green, as you can see.

Information gathered at midnight UTC at the end of the week. Swings are high, so for most up-to-date token prices, check Hyperliquid.

You see the numbers above… You can also see that HIP-3 deployers now are collectively the third biggest perp DEX by OI, with Trade XYZ being # 4 by itself, according to DefiLlama:

This activity was due to the military action the US and Israel took against Israel.

The weekend limits were hit on TradeXYZ, the system working as intended but the team will also improve the design based on the new lessons for “off-hours” trading.

Even more impactful, the activity on Hyperliquid attracted literal headlines from Bloomberg.

And HIP-3 is just a 4-month old product. It has its inefficiencies and imperfections that can sting if you fat-finger your trades. But both technical and adoption progress have been incredible.

We plan to make a post about HIP-3 and its deployers in the very near future.

On 26th February, HPL trading went live on Hyperliquid, and 0xNessus, one of the founders of HyperLend, posted on X to talk about the future of the lending platform.

In short:

We wrote about what we expected to happen during TGE here.

We were a bit off, with HPL trading around $16m FDV for the most part, so at a bit of a discount compared to AAVE. The orderbook is pretty thin, so swings up and down can be quick, which brings us to the last point. What did we do with our aidrop?

If you read our post, you know we said around $20M FDV is where we have to make a decision because that’s “fair value” when compared to AAVE, so we were waiting to see any extra utility or value accrual announcements, and actual price action.

We noticed that the Polymarket over $20M FDV Yes was still around 65% when HPL was trading at around $15M FDV, and that the liquidity in the HPL/USDH orderbook was way lower than the bets on Polymarket, so we assumed there would be a “last minute” strong push to $20M FDV.

We weren’t sure just how high it could go, so we set our sell order around $18M FDV. That got filled, so at the moment, we sold 100% of our HPL allocation.

Not because we don’t believe in the project, but because of opportunity costs and lack of concrete value accrual for HPL now. We will regularly keep tabs and adjust our allocation here when things improve.

We played our KNTQ airdrop differently back in November, but that’s something we can discuss in detail soon because Kinetiq’s second airdrop is coming in late March or early April, very likely.

The monthly 10M HYPE elephant in the room went on a serious diet.

On 6th March, 173k tokens will be unstaked by Hyperliquid Labs and distributed to team members.

And finally, Tokenomist also corrected their unlocks scheduled with the actual onchain unlocks rather than the linear 10M HYPE per month.

Let’s move to some technical news too…

Onchain backstop liquidator has been introduced for each HIP-3 DEX on testnet. See announcement below.

Great news to improve liquidity for all HIP-3 deployers.

Last but not least, the Hyperliquid frontend will reflect only onchain categories and descriptions for HIP-3 assets in this coming week.

Hyperliquid Staking ETP by CoinShares launched. It’s a regulated way to get exposure to HYPE, 0% management fee and staking rewards included. Staking returns are only 0.50% annually, so they keep a hefty commission there. As much as possible, you should self-custody spot HYPE (and other crypto) but for exceptional cases and more mainstream adoption, this is a very low-friction way to get HYPE exposure.

James Evans has a strong proposal for improving token launches on Hyperliquid. Many HyperEVM tokens “struggled” compared to other ecosystems, and while part of the reason is the “step by step” mindset in the Hyperliquid ecosystem, as opposed to max-hype and max-extract at TGE, the mechanics and features available also hurt early token performance and liquidity. James’s proposal tries to address this.

Felix is getting very close to launching spot equities. As a reminder, these are Ondo spot equities, minted on Ethereum mainnet and bridged by Felix. They will not be in the Hyperliquid orderbook, at least not in the early days.

SenpiAI launched Hyperliquid Agents, powered by OpenClaw. We’d be very careful with letting AI loose on any real money activity, but if you like to tinker and have the money to test without regrets… Well, you do you.

X user bad_auth built a live L4 orderbook visualizer. See your exact queue position, other market maker quotes updating in real time, individual order details… Very useful for people more focused on trading than capital allocation.

HyperBeat launches Trade, a unified Hyperliquid native trade and spend experience. You can get trading margin on your Liquid Banking collateral, sweep profits to spend in one click, and trade all assets on Hyperliquid.

Perps.fun, the HIP-3 launchpad we already analysed, should announce more info about their kpHYPE raise to deploy their HIP-3 DEX. We’re curious if they address any of the glaring issues with the concept in this launch.

HyperLend staking should go live, and other utility could be announced. If you regularly borrow, you will want to calculate if buying and staking HPL is useful just for the improved rate.