$25 Billion Mystery: Can Hyperliquid’s HYPE Token Survive VanEck’s Warning Signs?

Asset manager VanEck has raised concerns about the sustainability of Hyperliquid’s (CRYPTO: HYPE) astronomical market valuation of nearly $25 billion, questioning whether it can be justified by the layer-1 blockchain's current developer community.

Launched in 2024 with a highly anticipated airdrop, Hyperliquid's HYPE token quickly propelled the chain to become one of the most valuable in the industry. However, VanEck's research note highlighted the absence of a substantial developer base for Hyperliquid's smart contract platform, which could hinder the chain's continued growth and the valuation of its native token.

Hyperliquid's perpetual futures exchange has swiftly captured about 70% of the market share from competitors like GMX and Dydx, handling an impressive $260 million in daily transactions. This rapid rise mirrors the broader expansion of decentralized exchanges (DEXs), which saw record-breaking monthly volumes of $433 billion in December.

After surging over 500% since its launch, the HYPE token experienced a correction, declining from a high of $34 to around $25 by early January.

Emphasizing the need for diversification beyond its successful Perp DEX to maintain its high valuation and stay competitive, Hyperliquid's plan to launch an Ethereum Virtual Machine (EVM) smart contract platform is seen as a crucial move to achieve this goal. While some decentralized applications (DApps) are already being tested on the EVM's testnet, VanEck notes that most DEXs lack lasting competitive advantages due to the open-source nature of the industry.

For Hyperliquid to realize its ambition as a general-purpose blockchain, it must attract a thriving developer ecosystem to support diverse applications, ensuring sustainable growth beyond its current achievements.