4 Billion Dollars Alone. What is the Phenomenon of the Hyperliquid Project?

The cost of the Hyperliquid cryptocurrency airdrop (HYPE) is estimated at nearly $4 billion. The airdrop of the Hyperliquid cryptocurrency project has become one of the largest in the history of the cryptocurrency market.

The HYPE token, launched at the end of November by the Hyperliquid trading platform, has seen its price increase more than sixfold in less than a week, from $2 to $13. The capitalisation of the project almost reached $4 billion. The project achieved these significant results without attracting outside funding or investors who could influence its decisions.

HYPE was distributed to the crypto community via an airdrop, in which users gained the right to participate by accumulating special points through actions performed on the platform. Subsequently, the accumulated points were used by the developers to distribute HYPE tokens to participants.

Interestingly, the HYPE token is traded exclusively on their exchange, and no major platform has yet added it to their trading lists. According to their exchange Hyperliquid, as of 4 December the token is trading at $11.4.

The token's launch has generated considerable interest in the market. Since its introduction, the daily trading volume of HYPE has never fallen below $220 million, reaching a high of $570 million. The diluted capitalisation (FDV) of Hyperliquid tokens is around $12 billion. In addition, the project entered the top 50 largest cryptocurrencies by capitalisation.

The HYPE airdrop was one of the largest in 2024. Previously, the three leaders in terms of volume of tokens distributed were the crypto exchange Jupiter, the second-tier blockchain StarkNet and the memecoin Notcoin, each of which had distributed cryptocurrencies to its participants worth approximately $1 billion.

According to CoinGecko, the largest airdrops in crypto market history remain those of Uniswap ($6.43 billion), Apecoin ($3.54 billion), dYdX ($2.01 billion), Arbitrum ($1.96 billion), Ethereum Name Service ($1.87 billion) and Internet Computer ($1.73 billion).

Hyperliquid differs from its competitors who launched tokens via airdrop this year in its strategy of distributing crypto assets. The total number of Hyperliquid tokens will be capped at 1 billion, while the project has issued and distributed 31% (310 million) of HYPE tokens.

The total number of airdrop recipients was 94.000 wallets, with an average airdrop size of approximately 2,915 HYPE tokens. At $11.5 on 4 December, the average airdrop size per user was over $30,000, according to analytics service ASXN.

This is unusual compared to most large airdrops this year. According to exchange analytics department Binance, as of the end of May 2024, the cryptocurrency market has shown a trend towards token airdrops with low circulating supply and high FDV (fully diluted value) valuations.

This trend is known as the "low float, high FDV" concept, which implies that a project token has a low circulating supply compared to fully diluted value. "Low float" refers to a low circulating supply of tokens compared to the maximum possible issuance.

Keyrock analysts explain the success of this model by the fact that tokens with a small FDV offer growth opportunities and psychological comfort, attracting investors with the promise of future profits. On the other hand, projects with higher FDVs often struggle to maintain momentum as potential gains become limited.

"Projects that are generous with airdrops tend to build a more engaged user base, which leads to better results over time," Keyrock noted.

What is Hyperliquid?

The Hyperliquid blockchain is developed by Hyperliquid Labs. As stated on the website, the project is led by Jeff and Iliensinc, but their real names are not specified. Furthermore, it is reported that the organisation has not attracted third-party funding and is developing using its own funds.

The team has been active in market making since 2020 and, in 2023, launched its trading application based on the Arbitrum blockchain network. In March 2024, the project switched to its own Hyperliquid blockchain.

Hyperliquid is a blockchain similar to Ethereum or Solana and a decentralised platform that allows users to trade perpetual futures by aggregating liquidity from multiple sources. It also allows users to trade leveraged cryptocurrencies by borrowing funds to increase their purchasing power.

The Hyperliquid exchange is the only main application on the Hyperliquid network. Although there are other crypto projects based on the blockchain network, including memecoin, their total number listed on CoinGecko is only 16.

Since the beginning of November, Hyperliquid has nearly doubled the number of user deposits on its trading platform to $1.5 billion. This makes it the largest DEX for perpetual futures, surpassing Jupiter (Solana-based), Drift (Solana-based), GMX (which operates on the Arbitrum and Avalanche networks) and dYdX (which operates on its own network and Ethereum), according to DefiLlama as of 4 December.