Hyperliquid: The New Meme Token Maker

Whether it is on-chain derivatives, DeFi, or DEX decentralized exchanges, these fields have long been overcrowded and the competition is suffocating.

Hyperliquid, a decentralized perpetual contract trading platform, has attracted attention with its actual candlestick charts and rapid price increase, sparking discussion about the driving forces behind its popularity.

While some may dismiss it as a simple technological innovation craze, a deeper analysis reveals several factors contributing to Hyperliquid's quick rise to prominence.

Unlike familiar platforms like GMX and dYdX, Hyperliquid boasts technical and model disruptions, addressing common DEX pain points such as slow transaction speed, high fees, and poor transparency.

Its core features include:

1. Decentralized order book perpetual contracts: Hyperliquid employs the trading method of traditional markets, offering efficiency and precise matching.

2. Self-developed high-performance L1 chain: Unlike platforms dependent on Ethereum or Arbitrum, Hyperliquid has its own L1 public chain, ensuring low-latency, high-frequency transactions.

3. Zero gas bill: Hyperliquid eliminates gas fees, providing convenience and enabling unrestricted trading for DeFi users.

4. Full chain transparency: Every transaction is recorded on the chain, offering openness, transparency, and verifiability, improving trust and eliminating black box operations.

5. Innovative smart vault mechanism: Hyperliquid supports users creating personal "vaults" where others can deposit funds and copy the trading strategies of the vault owners.

Hyperliquid's advantages can be summarized as follows:

1. Fast speed and low cost: The self-developed L1 chain and zero gas fee provide convenient transactions and an excellent experience.

2. High transparency: All transaction data is made public to prevent black box operations.

3. Innovative and flexible: In addition to supporting perpetual contracts, Hyperliquid also provides advanced features like take profit and stop loss (TP/SL) and time-weighted average price (TWAP) to cater to advanced traders.

Moreover, Hyperliquid's meme launch mechanism, the Dutch Auction, offers a new path for the resurgence of memes.

In a Dutch auction, the price starts high and gradually decreases over time until someone bids. At Hyperliquid, a "listing quota" is auctioned every 31 hours, with the starting price typically twice that of the previous round.

This scarcity attracts memes because there is only one spot every 31 hours, presenting an excellent opportunity for exposure and gambling for any small-cap project or active community.

Even unknown small currencies can ignite market heat through the Dutch auction, given sufficient community enthusiasm and a catchy ticker name.

For instance, in a recent auction, the quota price soared to 100 WU (around 100,000 USD), setting the stage for more projects to spend heavily to secure a chance to "break out of the circle."

This way, small-cap meme coins not only gain attention through collective bidding but also become the focus of the industry.

Hyperliquid's role as a meme token-making machine is evident in pushing “small but beautiful” projects to a grander stage.

To get involved with Hyperliquid:

Method 1: Directly participate in spot projects (meme coins)

Many meme projects have been launched on Hyperliquid, typically having a lower market value but an active community atmosphere. For those who prefer low risk, these spot projects can be an option, offering potential projects driven by hot money.

Method 2: Participate in the Dutch auction and seize the opportunity of the internal market

For those with a higher risk appetite, own investment research strategies can be used to choose relevant memes that are auctioned by the Dutch auction mechanism, held every 31 hours. After the auction is successful, your tokens will receive trading support and community exposure from Hyperliquid.

Risks and recommendations:

Market risk: Participating in Hyperliquid's auction may involve some "dog coins" with low market capitalization and average community activity. Some coins may encounter problems like pull-ups and manipulation or even the risk of project failure. Especially when the auction fee rises to 100WU, many small projects may not have enough funds to cover the listing fees, and the quality of the project may not be guaranteed.

Liquidity risk: Since the platform has a limited number of listings and only one opportunity every 31 hours, small projects with low liquidity may experience drastic price fluctuations.

Participation logic: After some project parties obtain quotas through lower auction fees, they will use "pull-up" means to increase prices, thereby bringing higher handling fees and trading volumes. However, if the project does not have strong market support or substantial value, it may lead to a crash or "Rug Pull" (running away).

Recommendation: For beginners or users with less funds, it is advised to participate in Dutch auctions with caution. You can first observe some existing and active meme projects to gauge their market performance and community dynamics. When choosing whether to participate in the auction, you must have sufficient understanding and judgment to avoid blindly following the trend just because of the market enthusiasm.

Hyperliquid is undeniably a shining star in the DeFi track