🔥 Hyperliquid: The $160B+ Case for the Everything Exchange

Perpetual futures exchanges have captured the attention of not just crypto, but traditional finance—and the incumbents are starting to fight back. When the CME sues the CFTC over approving onshore perps, it's a clear signal: the product has reached critical mass.

Tushar Jain, Partner at Multicoin Capital and co-author of the firm's recent Hyperliquid investment thesis, joined Bankless to break down why the market is deeply mispricing hype at $63. According to Multicoin's base case analysis, Hyperliquid could reach a $160 billion valuation with hype tokens trading above $319—representing over 5x upside from current levels.

But this isn't just a bet on a fast-growing perp exchange. It's a bet on the infrastructure layer for the everything exchange—a decentralized backend powering global liquidity across crypto, equities, commodities, prediction markets, and beyond.

💼 Portfolio Margining: The Compounding Advantage

When asked what gets him most excited about Hyperliquid, Jain didn't hesitate: portfolio margining.

"Portfolio margining is the most exciting because it empowers all of the other categories of products and it provides a very powerful compounding return to scale."

Here's how it works: instead of managing separate collateral pools across different markets, Hyperliquid allows users to maintain one unified collateral account across Bitcoin, ETH, oil, gold, prediction markets, and options. When one position moves in your favor and another moves against you, you don't have to manually rebalance collateral—the system nets everything automatically.

This isn't just capital efficiency. It's a moat. Competitors can launch the same markets, but without the cross-margin infrastructure and unified liquidity pool, they face a significant disadvantage. Users already holding balances on Hyperliquid can seamlessly trade new products without depositing additional capital or switching platforms.

Translation: Winning begets winning. The more products Hyperliquid adds, the stickier the platform becomes.

🛠️ HIP-3: Decentralizing Market Creation

Hyperliquid's evolution from a single-team-controlled perp exchange to a decentralized platform hinges on HIP-3, which allows third-party deployers to create new markets permissionlessly.

Here's the structure:

• Deployers must post a 500K hype bond to gain listing privileges
• They control market parameters and liquidity settings
• They earn 50% of trading fees generated by their markets

The result? In just months, HIP-3 markets went from near-zero to roughly one-third of total Hyperliquid volume. This includes highly liquid markets for oil and gold—assets traders wanted exposure to, launched faster than the core team could have managed alone.

Jain sees this as part of Hyperliquid's progressive decentralization strategy:

"HIP-3 and HIP-4 will end up being the vast majority of volume because there's just going to be many more markets… I believe what they want to do is become a platform for others."

On the demand side, builder codes mirror this approach—allowing wallets like Phantom and MetaMask to route user activity to Hyperliquid while earning a share of trading fees. Together, HIP-3 and builder codes turn potential competitors into collaborators, expanding Hyperliquid's reach without the core team needing to manage every front-end or market.

📊 The Numbers That Matter: Liquidations Over Volume

When evaluating traction, Jain doesn't focus on volume—it's too easy to fake. Instead, he tracks three metrics:

1. Net trading fees paid (after rebates)—actual expenses users are willing to incur
2. Open interest—capital left on the platform with managed leverage
3. Liquidations—the hardest metric to game, since liquidations carry an explicit penalty

Hyperliquid's liquidation-to-volume ratio is significantly higher than competitors like Astra and Lighter. This indicates real directional risk-taking, not just incentivized wash trading or farming behavior.

"Liquidations explicitly carry a liquidation penalty that cannot be faked. That's the truest source of seeing real users taking directional risk."

For those tracking the data in real time, Jain recommends Coin Glass as a reliable source.

🎯 The Valuation Framework: Four Core Assumptions

Multicoin's thesis rests on four critical variables:

1. Growth of total crypto derivatives volume
   • Historical growth: 45% annualized over the past 5 years
   • Base case assumes this moderates to 35%
   • Bear case: 10% | Bull case: 50%
2. DEX market share of crypto derivatives
   • DEXs went from 0% in 2022 to 16% today
   • Base case projects 32%
   • Bear case: 20% | Bull case: 50%
3. Hyperliquid's share of DEX derivatives volume
   • Currently at 59% of open interest
   • Base case assumes Hyperliquid holds constant at 30%—which Jain considers highly conservative
4. Stablecoin balances relative to open interest
   • Assumes leverage ratios remain stable
   • Stable growth in USDC balances feeds into the Coinbase yield program, where 90% of interest goes to buy back hype tokens

Jain emphasizes this isn't about precise prediction—it's about providing a framework for investors to plug in their own assumptions and stress-test the thesis.

💰 Value Capture: Simple, Direct, Aligned

One of the cleanest aspects of the hype token is its value accrual model:

• All revenue flows directly to buying and burning hype
• HIP-3 deployers must stake hype to create markets
• Priority fees on Hyper EVM are paid in hype
• No equity entity siphoning off value—everything routes through the token

Jain contrasts this with older protocols where governance tokens had unclear economics or ambiguous paths to capturing value:

"Everything is aligned around this one asset. There's no ambiguity. It doesn't leave a risk open of 'will I actually be able to share in that as a token holder?'"

⚠️ The Unlock Risk: $625M Per Month

Core contributors were allocated roughly 24% of total hype supply, vesting at approximately 10 million hype per month through 2028. At $63 per token, that's $625 million per month unlocking.

Not all of this will be sold, but the scale raises a natural question: What keeps the team motivated after hitting generational wealth?

Jain's answer: The money was never the end goal.

"Once you have enough to feel secure, more money is not about making more money. It's about what that enables you to do. It's about what influence that gives you. People at this level are motivated by something more—they have a vision they want to see in the world."

If the team were planning to exit, Jain argues, it would have happened already. Instead, the pace of execution has remained unabated. That's the real signal.

🇺🇸 The Onshore Challenge: A Plausible Path

Hyperliquid is the most offshore of the major perp platforms—and that's been an advantage so far, granting flexibility and speed. But with CFTC Chair Mike Celig explicitly pushing to onshore perps, and competitors like Kalshi, Coinbase, and Lighter positioning themselves within US regulatory frameworks, the question arises: Can Hyperliquid penetrate US markets?

Jain outlines a multi-step regulatory pathway:

1. Perps become legalized and regulated in the US (already underway with Kalshi approval)
2. DeFi-specific legislation passes (likely the Clarity Act), enshrining protections for decentralized protocols
3. Hyperliquid meets the requirements of the Clarity Act (e.g., open-source code, validator decentralization)
4. Regulated US front-ends emerge, routing volume to Hyperliquid's decentralized backend via builder codes

Jain stresses this is a multi-year process, not an overnight shift. But the trajectory is clear, and Hyperliquid's architecture—permissionless, progressively decentralizing—positions it to eventually operate under US law without compromising its core functionality.

"I don't know that the Hyperliquid core team needs to actually do anything other than open source and increase node count. Builder codes allow front-ends to permissionlessly aggregate users and route volume."

🌍 The DeFi Mullet: Centralized Front-Ends, Decentralized Backend

Jain's ultimate vision isn't centralized vs. decentralized—it's a hybrid model he calls the DeFi mullet:

• Localized, centralized front-ends handle user acquisition, regulatory compliance, and customer support
• Global, decentralized backend (Hyperliquid) provides unified liquidity, cross-margin infrastructure, and permissionless market creation

This structure allows Hyperliquid to remain infrastructure—neutral, composable, and resilient—while letting specialized front-ends compete on UX, geography, and niche user segments.

Jain sees this as the endgame for DeFi:

"Anyone anywhere can get exposure to any asset that they want. That has been a core thesis for DeFi from the origins of this sector."

🔮 The Everything Exchange: Path Dependency Matters

Jain admits he has high conviction on the destination but remains flexible on the path. The goal—an everything exchange with permissionless access to any asset—has been DeFi's North Star for years. But betting on a specific implementation too early can be fatal.

He offers an analogy:

"Imagine being really bullish on ride-sharing but then you bet on Hailo or one of those other companies because you were convinced it would be regulated through taxi medallions. You were right about the ultimate goal—you just didn't make any money."

Hyperliquid, in Jain's view, is the most credible path to the everything exchange today. The evidence? Cash flow, user activity, and relentless execution.

Not hype (the emotion). Hype (the token).

Disclosures: Multicoin provides investment advice to certain private funds that own hype tokens and stands to gain if the price increases. For full disclosures and assumptions, refer to Multicoin's hype valuation report. This content is for informational purposes only and is not investment, tax, or legal advice.