CEEX Insights | When Liquidity Becomes the Backbone of Protocols: An Anatomy of HYPE's "Endogenous Value Cycle"

As we enter the end of 2025, macro liquidity and the crypto market are once again entangled. Trump's tariff remarks ignited panic, with USDe decoupling and high leverage cascading liquidations pushing the entire market into a boiling oil pot, evaporating hundreds of billions of dollars in market value in just one day. Looking back after the crash, two questions have been repeatedly tested: who does the capital really trust, and where is the risk actually placed on the balance sheets? Centralized giants remain large but are frequently entangled with compliance and trust issues; on-chain protocols are gradually growing, moving from niche experiments into mainstream visibility. In the current environment, Hyperliquid and its token HYPE have become one of the most controversial and hardest to ignore examples this year.
For many seasoned contract players, Hyperliquid has transformed from a "newcomer" into the default entry point for daily trading. In August 2025, the protocol's monthly revenue first surpassed $106 million, corresponding to nearly $400 billion in perpetual contract trading volume, with cumulative trading volume crossing the $2 trillion threshold, capturing about 60-70% of the decentralized perpetual market under various statistical measures. Based on August's performance, the annualized revenue falls within the range of $1.1-1.2 billion, with TVL maintaining around $5 billion. HYPE once surged above $50, then retreated to oscillate between $30 and $40. If we consider the on-chain protocol as a company, it is akin to a "decentralized exchange" with a revenue level of one billion dollars. In the buyback rankings of 2025, HYPE accounted for about 46% of the total market buyback expenditure, with cumulative buyback amounts exceeding $640 million.
Behind the numbers lies an extremely aggressive value path: to tightly weld liquidity and cash flow to the token as much as possible.

1. The Undercurrent of Giants: Who is Ripping Open the New Derivatives Landscape?

After the collapse of FTX, the derivatives track has been in a long-term subtle state: traders' reliance on high leverage and liquidity has increased, while their tolerance for centralized black boxes has rapidly decreased. Compliance regulations are tightening, and leading CEXs are restricted in some jurisdictions, with futures and contract products occasionally facing rectifications. In the spot market, Uniswap and Curve have already proven that "automated market making + on-chain settlement" can support high-frequency liquidity; perpetual contracts belong to another logic, where high leverage, deep order books, and millisecond-level pricing in extreme markets impose harsher demands on infrastructure.
Hyperliquid has chosen a path with maximum difficulty. The team did not rely on existing public chains but built a high-performance dedicated chain, moving matching and settlement entirely on-chain, and using a complete set of market-making and clearing logic to try to replicate the centralized experience. The results are already evident in public data. For example, in August 2025, Hyperliquid's share in the decentralized perpetual market reached around 70%, with monthly perpetual trading volume of about $380-400 billion, and cumulative trading exceeding $2 trillion. During the same period, many competitors had just pushed their TVL to one billion dollars, while Hyperliquid's TVL had stabilized at the $5 billion level, with annualized revenue estimated by several research institutions in the range of billions of dollars.
According to statistics from research institutions and trading platforms, about 97% of the protocol's transaction fees are automatically used for buying back HYPE through the on-chain Assistance Fund, forming a continuous source of buying pressure that "devours" circulation, with annualized buyback scale estimated at around one billion dollars, accounting for about 10% of the circulating market cap given by some models. At the current scale, HYPE is no longer just a platform token. From a capital market perspective, it is equivalent to a high-growth company using almost all profits for share buybacks, combined with token locking, staking, and protocol treasury, making the chips in the secondary market increasingly tight. The logic of Wall Street has been brutally transplanted onto the chain: whoever can incorporate more real cash flow into the token has the right to sit higher up the food chain. However, the story has only just entered its second act, with the real controversy focusing on liquidity treasury and risk allocation.

2. The Treasury Monster: How Does HLP Feed Liquidity?

Hyperliquid's choice is to concentrate the vast majority of liquidity in a treasury called HLP (Hyperliquidity Provider). To ensure smooth contract trading, order book depth and matching quality are fundamental. Many people simply use the term "treasury monster" to describe the entire structure: on one hand, it is the largest market maker in the market, providing bilateral quotes for major trading pairs; on the other hand, it also takes on the role of a liquidator, passively taking over liquidated positions in extreme market conditions, attempting to use treasury assets to counteract severe volatility.

During stable periods, the treasury earns revenue through spreads and funding fees, effectively using protocol-level capital to take over most of the market-making income; during amplified volatility, the treasury absorbs a large number of opposite positions, attempting to mitigate risks over a longer time dimension. To simplify, HLP can be seen as a super-sized "proprietary trading desk." This design makes Hyperliquid's order book resemble that of a mature CEX: popular tokens have dense orders, and the impact cost is low, with many users even unaware that the counterparty is often the treasury rather than a natural counterparty.
The advantages of a centralized treasury structure are straightforward, but the drawbacks are equally apparent. In March 2025, a manipulation battle surrounding the Solana ecosystem meme coin JELLYJELLY put the treasury to its first major test. A large trader aggressively pushed up the spot price in external markets while betting against the contracts and the treasury, temporarily pushing the HLP treasury into over $12 million in unrealized losses. To prevent further losses, the team chose to use their authority to forcibly liquidate the relevant positions and ultimately delisted the JELLY contract. The incident directly triggered a drop of about 20% in HYPE on that day, and discussions in the community about "degree of decentralization" and "team authority limits" heated up.
Fast forward a few months, and the same structure was once again thrust into the spotlight. In November, a trader used about 3 million USDC to pump the price on the POPCAT contract, luring other participants to chase the rise, and then suddenly dumped, triggering a series of liquidations amounting to tens of millions of dollars, forcing the HLP treasury to absorb about $4.9 million in bad debts, leading the platform to temporarily suspend some deposit and withdrawal functions. Security firms, in their reviews, consistently concluded that the protocol contract itself was not breached; the attacker merely exploited the fragile structure constituted by "small-cap meme + high leverage + single treasury" to execute a near textbook-level manipulation attack within the bounds of the rules.
When viewed together, the contradictory nature of HLP is more thoroughly exposed. On one hand, the centralized treasury allows Hyperliquid to provide extremely deep liquidity with relatively controllable capital, pulling the on-chain derivatives experience up to centralized levels, resulting in capital efficiency far exceeding traditional AMM models; on the other hand, the large number of opposing bets taken on the same treasury makes it easier for extreme market conditions and manipulators to amplify losses to a systemic level. The team can optimize risk parameters by limiting maximum positions, dynamically adjusting margins, and increasing external pricing sources, but it is challenging to change the fundamental form of "risk concentrated in a massive treasury."
From the results, the JELLY and POPCAT incidents did not fundamentally weaken Hyperliquid's appeal; trading volume and revenue returned to high levels after brief fluctuations, and the treasury size remained in the tens of billions of dollars range. However, the accumulated incidents of manipulation, outages, and security breaches over the years continuously remind participants: high performance, strong buybacks, and centralized treasury are a bundled offering that brings considerable returns while requiring users to accept corresponding governance models and trust structures. For the entire industry, Hyperliquid has rehearsed the extreme scenarios that "on-chain CEX" might encounter in advance. Later participants will find it difficult to simply replicate HLP and the 97% buyback, but will explore more in governance authority distribution, multi-treasury structures, and public risk control parameters.

3. The Magical Cash Flow: How Does 97% Revenue Feed HYPE?

What truly makes HYPE a model of "internal value circulation" is not merely high revenue, but how the protocol chooses to handle that revenue. Traditional platform tokens often employ a mix of mechanisms like fee discounts, buybacks and burns, and staking dividends, and many times, the rhythm and scale of buybacks lack transparency, making them susceptible to accusations of being arbitrary actions. Hyperliquid's approach is simple and somewhat extreme—most of the protocol's revenue is directly reflected as verifiable buying pressure.
According to research from several institutions, about 97% of transaction fees are automatically injected into the on-chain Assistance Fund, used to buy HYPE on the secondary market in a decentralized manner, with the remaining portion reserved for operations and reserves. From the buyback records of 2025, during periods of overall market enthusiasm, Hyperliquid even contributed about 46% of the total token buyback expenditure in the market, with cumulative buyback amounts exceeding $640 million. In other words, it is as if an on-chain "company treasury" continuously converts profits into shares, and all buying actions are publicly recorded on-chain, allowing anyone to check specific transaction records. Thus, the value logic of HYPE forms a visible closed loop. Perpetual trading generates fee income, which is used to buy back tokens at a predetermined ratio, and the buybacks and staking reduce circulating chips, thereby elevating the protocol rights represented by each token. If we consider the protocol as a "cash flow distribution machine," holding HYPE is equivalent to acquiring a "right certificate" for future buyback and burn actions.
The clearer the internal cycle, the more friendly it is to valuation models, and the easier it is to attract institutional investors. Some research reports have begun to use "market cap / annualized buyback scale" to measure the pricing rationality of the entire system, concluding that Hyperliquid's valuation multiple is roughly around ten times, close to that of traditional high-growth companies. From the performance in 2025, HYPE's price movement is highly correlated with protocol revenue: when August's revenue set a record, the token price surged to an all-time high; in mid-October, when the market overall corrected sharply, revenue faced short-term pressure, and HYPE also retreated to the $30 range.
Of course, the stronger the sense of magic, the clearer the vulnerabilities. An over-reliance on trading volume means that once macro liquidity contracts and leverage demand cools, protocol revenue declines, and buyback scale shrinks, the flywheel will switch from "full-speed operation" to "jogging or even stalling." In traditional stock markets, similar situations would be interpreted as "performance growth slowing, stock prices entering a valuation reshaping cycle." For a highly financialized token, market sentiment often amplifies similar feedback, turning bullish narratives into "on-chain Nasdaq" during rises, and into "high-valuation fragile stocks" during declines. From another perspective, Hyperliquid's design poses a new question to the entire industry: as more protocols incorporate real cash flow into the token system, are holders "protocol shareholders" or "functional certificate holders"? How is the securitization risk defined in the eyes of regulators? Such questions currently lack standard answers but have already tangibly driven the evolution of platform tokens and income distribution mechanisms.

4. Risk Control Final Exam: From Manipulation Events to API Outages

If HLP and the buyback flywheel constitute Hyperliquid's offensive front, then the series of events that occurred in 2025 can almost be seen as the final exam for the defensive front. Manipulation battles, outages, and hacking incidents have taken turns to expose the boundaries of the entire architecture under high-pressure conditions within a year.
In the first half of the year, the JELLY incident made the risks of a centralized treasury explicit; in the second half, POPCAT replicated a similar path, causing the treasury to absorb nearly $5 million in bad debts, leading to a brief suspension of deposits and withdrawals and community panic. Meanwhile, a large user experienced a private key leak on Hyperliquid, with about $21 million in assets transferred in one go. Security firms and media emphasized in their reports that "there is no vulnerability at the protocol level; the issue lies in user-side key management," but for ordinary users, assets evaporated within the Hyperliquid ecosystem, and most would not delve into the technical boundaries.
The API outage incident on July 29 served as another wake-up call from a different dimension. Due to a sudden surge in traffic, the API experienced a failure for about thirty minutes, causing some users to be unable to close positions during high volatility, resulting in significant losses. Afterwards, the team automatically compensated affected users about $1.5-2 million based on on-chain snapshots and internal records, effectively using protocol capital to cover a "technical incident." This move earned considerable goodwill in the industry, with many comments viewing Hyperliquid as "one of the few protocols willing to take responsibility for their own mistakes," further emphasizing the central role of the treasury and team in risk management.
As a result, Hyperliquid did not lose momentum after several shocks; trading volume and revenue remained at the absolute leading position in on-chain derivatives, and the price of HYPE began to repeatedly change hands around the $30 line after experiencing deep pullbacks. However, the accumulated incidents of manipulation, outages, and security breaches continuously remind participants: high performance, strong buybacks, and centralized treasury are a bundled offering that brings considerable returns while requiring users to accept corresponding governance models and trust structures. For the entire industry, Hyperliquid has rehearsed the extreme scenarios that "on-chain CEX" might encounter in advance. Later participants will find it difficult to simply replicate HLP and the 97% buyback, but will explore more in governance authority distribution, multi-treasury structures, and public risk control parameters.

5. Looking Back at CEX from Hyperliquid: Another Answer from CEEX and CMC

If we zoom out from a single protocol, we can see another completely different path being attempted.
Compliance-oriented comprehensive exchanges like CEEX tend to tell their story through a combination of "long-term operation + compliance licenses + platform tokens": on one hand, they build a solid business foundation through spot, contracts, wealth management, and fiat channels, while on the other hand, they tie the broker network and global market expansion to the same line with platform tokens. Public information shows that CEEX is broker-centric and officially launched its Dubai VASP license application in 2025, treating the Middle East as a new compliance foothold; on the other hand, CMC, as a platform token, is designed to be extremely deflationary, serving as a carrier of broker rights with attributes of platform tokens, mining tokens, and memes, with all output used to reward brokers, making it the core chip of the broker incentive program.
Recently, CEEX has also launched the CMC Global Ambassador program in Africa, directly placing the "broker center" and one-stop mining entry on the homepage with the new version of the app. Mining is only open to brokers, and the information of brokers and miners is all visible on the front end, implementing the strategy of "broker priority, CMC binding long-term contributions" through product details. Compared to Hyperliquid's high-speed buyback flywheel, this alternative path resembles a slow but stable long-term operation: the exchange turns business cash flow into the long-term value of CMC, which in turn continuously feeds back to brokers and deep users through mining and incentives.

Conclusion: From High-Intensity Experiments to Long-Term Paradigms

Hyperliquid has brought perpetual contract DEX to an unprecedented height: a dedicated chain supports performance, the HLP treasury acts as a liquidity engine, and nearly all protocol revenue flows back to the token, delivering impressive trading and revenue data in a short time while incurring a series of tuition fees from manipulation incidents and system failures. It proves one thing: as long as the product is right and the incentive design is direct enough, on-chain derivatives have the strength to wrestle significant market share from centralized entities.
At the same time, the route represented by CEEX + CMC, "compliance platform + ultra-deflationary platform token," is also advancing with a different rhythm. The former resembles an experimental machine operating at high speed near the red line, while the latter is closer to a business report over a long cycle. One bets on on-chain performance and cash flow flywheels, while the other bets on compliance moats and broker networks.
From a researcher's perspective, rather than hastily concluding "who wins and who loses," it is better to leave the perspective for the next cycle. What truly matters is likely not the simple opposition between CEX and DEX, but who can tie trading volume, cash flow, risk management, and token value together in the most transparent and sustainable way in an environment where macro liquidity fluctuates and regulatory boundaries gradually clarify. In the current context, the story of HYPE is far from over, and the platform token paradigm surrounding CMC may just be beginning.