Hyperliquid's positions hit a record high, but revenue has fallen for four consecutive quarters. Where has the money gone?

Original Title: Hyperliquid's RWA perps boom is eating into the revenue that backs HYPE
Original Author: Shaurya Malwa, CoinDesk
Original Compilation: Chopper, Foresight News

The contract holdings on the Hyperliquid platform have reached an all-time high, but the trading fee revenue that the platform can retain is continuously shrinking.

On July 13, the total scale of leveraged positions held by traders on the platform, which is the open interest, surged above $11 billion, setting a new record for Hyperliquid in 2026. In the past 30 days, the total trading volume of Hyperliquid perpetual contracts approached $178 billion. Now, including all centralized trading platforms, Hyperliquid accounts for about 9% of the global open interest in perpetual contracts, up from less than 7% at the end of May.

However, the platform's revenue has taken a reverse trend. According to data from DeFiLlama, the total revenue of the Hyperliquid protocol peaked at about $357 million in the third quarter of 2025, and then fell each quarter, dropping to $295 million, $217 million, and approximately $202 million in the second quarter of 2026. Despite the continuous increase in the number of trades, the platform's revenue has decreased by 43% from its peak.

Hyperliquid's platform revenue has declined for four consecutive quarters

The Hyperliquid improvement proposal HIP-3 can explain why the platform is unable to retain all the revenue generated by its own business. Since October 2025, anyone who stakes 500,000 HYPE (approximately $28 million at current prices) can deploy their own perpetual contract market on Hyperliquid's order book and can take away up to half of the trading fees.

At the beginning of 2026, markets deployed by external developers accounted for only 2% of Hyperliquid's perpetual contract trading volume, but this proportion has now approached 50%.

Revenue data clearly reflects the impact of revenue sharing. The portion of fees directly returned to developers, market makers, and the platform's liquidity treasury accounted for only 6% of total revenue in the second quarter of 2025; a year later, this proportion had risen to 18%.

In the second quarter, developer fee revenue generated by front-end routers like Phantom was about $16 million, and this amount was entirely treated as a cost, flowing out to external parties without exception, belonging to transaction flow.

Flow of trading fees

Traders are continuously pouring in, driven by new products launched in these third-party markets: Real World Asset (RWA) perpetual contracts. Contracts tracking crude oil, gold, Nvidia, Tesla, the Nasdaq 100, and even contracts for unlisted companies like SpaceX have seen open interest reach a new high of $3.6 billion this month, surpassing Bitcoin to become the largest trading market on the platform.

From July 13 to July 19, the trading volume of tokenized stocks and commodity contracts reached $25 billion, accounting for 52% of the total trading volume that week, surpassing cryptocurrency perpetual contracts for the first time. These contracts are settled in stablecoins and have no expiration date, allowing trading even on weekends when the NYSE is closed. If you want to trade Nvidia leveraged contracts at 2 AM on Sunday, there are almost no other similar options available in the market.

However, this round of growth is highly dependent on a single entity. Trade.xyz accounts for over 90% of the open interest under the HIP-3 mechanism. This means that Hyperliquid's impressive records heavily rely on this deployer's oracle selection, margin parameter settings, and risk control capabilities.

Last Monday, the risks hidden in this model were exposed: a large transaction occurred on a liquidity-thin trading platform in Korea, directly causing Trade.xyz's SK Hynix contract to plummet by 19%, triggering a large number of liquidations, and the institution later agreed to compensate affected users.

Hyperliquid will inject about 97% of trading fees into an assistance fund, which repurchases and destroys HYPE tokens in the open market. So far, approximately 44.5 million HYPE tokens have been destroyed from the total supply. The repurchase amount is directly linked to the platform's revenue; as revenue declines, the scale of repurchases also shrinks. In the third quarter of 2025, the fund repurchased HYPE worth nearly $290 million; in the second quarter of 2026, the repurchase scale was about $149 million, almost halving.

Data from CoinDesk shows that last Friday, HYPE was priced close to $55, down 5% for the week, and compared to the historical high of about $77 on June 16, the decline was about 28%. Based on an annualized revenue of about $785 million, the token corresponds to a circulating market cap price-to-earnings ratio of about 16 times, and a fully diluted price-to-earnings ratio of about 70 times.

In the past month, holders from institutions like Multicoin Capital and Bitwise have transferred large amounts of HYPE tokens to trading platforms.

The Hyperliquid ecosystem is actually quite thin. Among the 48 Hyperliquid ecosystem tokens tracked by CoinGecko, almost all market value is concentrated in HYPE. The second and third largest are Ethena's USDe (about $4.5 billion) and USDT0 (about $4 billion), both of which are externally issued stablecoins linked across chains. The largest natively issued token on the platform is PURR, with a market cap of only $53 million, less than 0.5% of HYPE's market cap. The market's valuation of HYPE mainly comes from the business model of the Hyperliquid trading platform itself, rather than a rich native application ecosystem.

The value of the Hyperliquid ecosystem is concentrated in HYPE

Token supply and regulatory pressures are both mounting. On August 6, nearly 10 million HYPE tokens were unlocked for core contributors, worth about $550 million at current prices; subsequent unlocks will continue monthly until 2027, while the total circulating supply of HYPE is only 222 million tokens.

As of the week of July 17, the HYPE spot ETF experienced its first weekly net outflow since its establishment, amounting to about $7 million, ending a streak of nine weeks of inflows. The Monetary Authority of Singapore (MAS) included the platform on its investor risk warning list at the end of June, and the UK had previously issued risk alerts; executives from CME and ICE have also urged the U.S. CFTC to review its commodity perpetual contract business.

Competition has also emerged from unexpected places. Just a month after broker Robinhood launched Robinhood Chain, the decentralized trading platform in the meme coin sector has seen daily settlement volumes exceed $600 million, and under some statistical measures, its daily speculative trading activity has surpassed that of Hyperliquid.

Of course, all of the above does not mean that this platform has failed. Data from ARK Research shows that as of July 31, Hyperliquid and Pump.fun together accounted for 67% of total revenue from crypto applications. Grayscale has also compared Hyperliquid to Amazon AWS: external developers build products on the platform, and the platform takes a share from all transactions.

But this comparison precisely points out the existing problem. In the first four weeks of the third quarter of 2026, Hyperliquid's total revenue was about $45 million; if this pace continues, total revenue for the quarter will approach $150 million, marking the fourth consecutive quarter of revenue decline; and the buying power supporting the HYPE token will further weaken.