Hyperliquid protocol’s latest upgrade – HIP-3 – has just gone live. As the third improvement proposal passed, it represents a major step towards more radical decentralization. The Hyperliquid HIP-3 upgrade, by virtue of enabling permissionless perpetual market creation, has become one of the biggest upgrades for the decentralized derivatives exchange Hyperliquid.
The upgrade follows a week of mayhem in the cryptocurrency markets as liquidations worth nearly $19.3 billion took place. The largest among them came from Hyperliquid, and to be more precise, more than $10 billion was liquidated. Amid all the volatility, HYPE, the native token of the platform, has been able to double from $20 to $42.
Hyperliquid HIP-3 proposal: Permissionless perpetual market creation
Hyperliquid HIP-3 has officially gone live, and now any builder will be able to create perpetuals on the Hyperliquid decentralized trading platform. To ensure the quality of markets created, each market creator must stake 500,000 HYPE tokens.
The newly introduced feature of the protocol is expected to be integrated with HyperEVM. It will allow each user to run smart contracts on HyperEVM, participate in the protocol’s governance and use other existing markets.
HYPE Token Double After Price Crash
The news of Hyperliquid HIP-3 officially going live was initially announced on the project’s Discord channel. The post noted that the activation was scheduled for October 13, after the system was tested extensively on a testnet earlier in the year. “While this won’t immediately change the experience for users, it’s a huge unlock for builders,” the announcement read.
With the activation of HIP-3, the Hyperliquid protocol has become one of the few in the decentralized derivatives market that offers fully permissionless on-chain perpetual market deployment. HIP-3 is no different than other notable improvement proposals for the platform as it also blurs the line between the protocol and its ecosystem. In addition to that, it also decentralizes the future of the exchange itself by putting the exchange’s development power in the hands of its community.
Hyperliquid: HIP-3 Safeguards and Governance
The Hyperliquid HIP-3 proposal, as good as it is for the platform, does include a number of safeguards to ensure the network’s overall health. Some of them are listed as follows:
- Validator slashing is included to penalize those found to be violating protocol.
- Open interest caps have been provided.
- Staking requirements that are needed before deploying new markets to ensure protocol sustainability.
The whole process of the Hyperliquid HIP-3 proposal adoption has been described to be quite similar to the safety mechanism implemented by the most popular proof-of-stake blockchains such as Ethereum.
To conclude, for the protocol builders it opens up an entirely new world. The platform gives builders the opportunity to develop on an open permissionless platform and test new trading products while being able to tap into Hyperliquid’s deep liquidity, transparent risk engine, and high-performance matching layer.
Hyperliquid HIP-3: From Mayhem to Recovery
The activation of Hyperliquid HIP-3 goes hand in hand with one of the most chaotic weekends for the crypto derivatives market in recent months. Rising global trade tensions have triggered mass liquidations as global investors rush to deleverage their portfolios. Major centralized and decentralized exchanges have felt the heat of liquidation pressure as $19.3 billion worth of positions were liquidated. The data from Coinglass shows that more than $10 billion of those liquidated positions were on Hyperliquid.
HYPE is one of the crypto assets that have seen increased interest from traders after the release of HIP-3. The HYPE price crashed to $20 before bouncing up to $42, the level which was previously a major support for the crypto asset. Hyperliquid stated in its Discord server that as soon as the support zone was cleared, a fresh buy wall emerged. This time around, however, the crypto asset has managed to recover from its support zone to form a fresh support above $42.
If HYPE is able to break through the $45 level, its price is expected to reach $52, the previous swing high. From a technical analysis perspective, the technical momentum has been positive for HYPE.
Hyperliquid HIP-3: Next Big Thing in DeFi and Derivatives
Hyperliquid HIP-3 is, in many ways, expected to be the next big DeFi upgrade. It is the upgrade that could change the landscape of the DeFi derivatives market. Enabling permissionless perpetual market creation helps Hyperliquid shift from a protocol to a truly decentralized ecosystem.
In an ecosystem where the community owns the keys to the platform’s future, the community can freely create, use, and monetize any market structures they want. What’s even more interesting is that Hyperliquid’s permissionless innovation model is expected to help new categories of perpetual futures like synthetics real-world assets (RWAs) and yield-based products, evolve.
As central exchanges become more regulatory-compliant and opaque with their decision-making, the DeFi derivatives markets like Hyperliquid are creating more transparent financial systems that are more conducive to community-based governance.
Hyperliquid HIP-3 Developer Tools and Community Reaction
Discord community members of Hyperliquid have already started brainstorming ideas on how Hyperliquid HIP-3 could be integrated with existing on-chain components. Some of the tools that the Discord community of Hyperliquid has been discussing on how to best use the platform in conjunction with Hyperliquid HIP-3 include liquidity vaults, automated strategies, and cross-margin.
Hyperliquid’s HIP-3 also works to improve the protocol’s appeal to institutional DeFi participants. In a combination of permissionless continuous innovation and staking-based security assurances, HIP-3 is also expected to help Hyperliquid accelerate adoption from institutional DeFi participants, who are mainly professional traders seeking to trade derivatives on decentralized exchanges without any counterparty risks.
Hyperliquid is still in the development process. The company’s co-founder and lead contributors have mentioned that Hyperliquid HIP-3 is not the end of the road for the Hyperliquid development team. According to the company, the future improvement proposals such as dynamic staking rewards and cross-chain settlement layers are currently in the works. In the meantime, it is expected that with each developer and user that comes onboard, the Hyperliquid community will only get bigger.
The road ahead for HYPE and Hyperliquid
It is still unclear as to how HYPE price will react after the Hyperliquid HIP-3 has gone live. The following aspects will be under the watch in the coming weeks:
- The number of new perpetual markets that are launched under the permissionless model.
- Whether or not staking 500,000 HYPE tokens for deploying a perpetual market would drive the demand for HYPE to accumulate more.
- The price action in the short and the long term. Whether the price is able to break through the $45 level will be a determining factor for the HYPE price action.
In conclusion, the long-term future of the Hyperliquid protocol is clear enough. With HIP-3, the Hyperliquid platform has positioned itself for the self-sustaining, builder-owned trading network. The permissionless innovation is expected to become Hyperliquid’s most valuable asset at a time when regulation and centralization pressures are on the rise.
