Inside Grayscale’s Bull Case for Hyperliquid: The $2.95 Trillion DeFi Exchange

Grayscale Research has cast Hyperliquid as one of the most significant breakout stories in decentralized finance — calling it a platform with the potential to scale into a major on-chain financial services provider . The bullish case is not built on speculative narratives, but on a simple structural argument: Hyperliquid is a high-volume exchange business generating real fees, with a token designed to capture that value and an institutional product pipeline that could broaden access to it.

The Revenue Engine: $844 Million and Market Dominance

Hyperliquid closed 2025 with $844 million in revenue and $2.95 trillion in total trading volume, according to multiple data sources . Perpetual contracts drove approximately 95% of that fee income, generating $848.33 million in fees compared to $40.61 million from spot trading and $19.10 million from HLP transactions .

This revenue put Hyperliquid in rarefied company. By one measure, it ranked second among all blockchains in 2025 revenue behind only Solana — and ahead of Ethereum — despite being a Layer-1 with essentially a single primary application . Grayscale noted the platform generated nearly $800 million in annual revenue without raising venture capital funds, with all activity coming from non-U.S. participants .

The exchange's market share underscores the concentration. Hyperliquid captured 73% of all decentralized perpetual trading volume in the first half of 2025, with monthly volumes peaking at $270 billion in May . It commands roughly 70% of all decentralized perpetual open interest, processing about $10 billion in daily volume out of a total $28 billion across all DEX derivatives markets . Open interest sits at around $7 billion, positioning Hyperliquid as the third or fourth largest crypto perpetual futures exchange globally by that metric — putting it in direct competition with centralized exchanges .

The HYPE Token Flywheel: Buybacks That Tied Value to Volume

At the heart of the bullish thesis is Hyperliquid’s tokenomics, which allocate up to 97% of protocol fees to an Automated Assistance Fund that buys back HYPE tokens from the open market . This creates a direct link between platform activity and token demand: more trading generates more fees, which generates more buybacks, which can support token price.

The scale of this mechanism is substantial. By January 2026, the Assistance Fund had accumulated buybacks of over 37 million HYPE tokens valued at more than $1 billion, with monthly buyback amounts reaching $95 million . By November 2025, cumulative buybacks had reached approximately $1.3 billion . One analysis projected that at current rates, the buyback program could absorb all liquid HYPE supply in under two years .

This creates what Grayscale frames as an exchange-equity-style valuation case: if Hyperliquid can sustain its trading volumes, the token captures a share of that activity in a way that resembles how exchange stocks benefit from trading volume — but with the added mechanism of protocol-level buybacks .

However, the flywheel is not a guarantee. HYPE experienced net inflation in some periods despite buybacks, and upcoming token unlocks — including a scheduled $256 million unlock event — pose a direct challenge to the deflationary narrative . Supply dynamics can overwhelm demand-driven buybacks if emissions or selling pressure outpace them.

The Institutional Gateway: Grayscale’s GHYP ETF

Grayscale’s conviction in the thesis is most visible in its product pipeline. On March 20, 2026, the firm filed an S-1 registration with the SEC for a spot HYPE ETF that would trade on Nasdaq under the ticker symbol GHYP, with Coinbase Custody as custodian . A third amended S-1 was submitted on May 22, 2026, shifting the custody partner to Anchorage Digital and incorporating on-chain staking yields into the ETF structure .

The filing is significant as Grayscale’s first move into DeFi infrastructure ETF products, signaling that one of the world’s largest digital asset managers views Hyperliquid as a foundational asset alongside Bitcoin and Ethereum . Two spot HYPE ETFs from other issuers are already live and accumulating, with cumulative inflows of $74.91 million and combined net assets of $89.20 million within their first weeks .

It’s important to note that Grayscale’s GHYP remains a proposed registration. No HYPE ETF has received SEC approval yet, and the SEC has up to 240 days to review each filing . The filing also restricts share purchases to minimum blocks of 10,000, which limits direct access to institutional and accredited participants . Approval is not assured, and Grayscale joins competitors like 21Shares and Bitwise in the race for altcoin ETF approvals — meaning any single filing could face delays, denials, or competitive pressure .

Sector Tailwinds and the Exchange Comparison

The Decentralized perpetual market crossed $1.2 trillion in monthly volume during 2025, and Hyperliquid’s dominance made it the primary beneficiary . Grayscale’s research frames Hyperliquid as a DeFi platform entering exchange-scale trading markets, arguing it can be valued like an on-chain exchange business rather than a purely narrative-driven crypto asset .

The comparison has teeth: Hyperliquid’s daily average volume of $8.34 billion and its $7 billion in open interest put it within range of mid-tier centralized exchanges, and all of its 2025 growth occurred without venture capital backing — a rarity in crypto infrastructure .

Key Risks That Could Undermine the Thesis

Execution and Competition Risk

Sustaining a 73% market share is not guaranteed. Competing decentralized venues can improve liquidity, incentives, pricing, or user experience, and centralized exchanges retain deep capital advantages. If Hyperliquid’s market share erodes, the revenue flywheel weakens proportionally.

Regulatory Uncertainty

The GHYP ETF is a proposed product, not an approved one. The regulatory path for spot crypto ETFs beyond Bitcoin and Ethereum remains uncertain, and the SEC has not indicated a clear timeline for HYPE ETF approvals . The broader regulatory environment for DeFi tokens classified as potential securities also remains unresolved.

Synthetic Pre-IPO Derivatives: A Regulatory Gray Zone

On May 18, 2026, Trade.xyz launched SPCX-USDC, a synthetic perpetual contract on Hyperliquid that tracks the implied price of SpaceX common stock, opening at a $150 reference price implying a roughly $1.78 trillion valuation . The contract generated about $33 million in volume and coincided with a roughly 7% rise in HYPE over 24 hours, even as bitcoin fell below $77,000 .

These contracts are built on Hyperliquid’s HIP-3 framework, which allows anyone to create perpetual futures markets by staking HYPE tokens . Similar markets for Anthropic and OpenAI are either live or in development . The contracts are synthetic, meaning no actual shares change hands — traders take derivative exposure anchored to a reference price via oracle feeds and funding-rate mechanics .

While this legal structure differs from tokenized stock products that use special purpose vehicles, the instruments remain in a regulatory gray zone. SpaceX has not authorized the product . Tokenized products for Anthropic and OpenAI on other platforms crashed roughly 50% in the same period after both companies warned that SPV-based share transfers are void . The risk is that these synthetic pre-IPO markets attract regulatory scrutiny that could extend to the Hyperliquid platform itself — not because the contracts are equity, but because they enable price discovery for private companies in a permissionless, leveraged environment.

Token Supply Dynamics

Even with strong buyback demand, HYPE’s price can face downward pressure from scheduled token unlocks, emissions, or sell pressure from early holders. The November 2025 token unlock event demonstrated this vulnerability, causing price drops despite ongoing buyback activity .

On-Chain Leverage Demand Susceptibility

Hyperliquid’s entire revenue thesis depends on continued perpetual futures trading activity. In a market downturn or risk-off environment, leveraged trading demand can contract sharply, directly reducing fee revenue and weakening the buyback mechanism .

Bottom Line

Grayscale’s bullish thesis on Hyperliquid is a bet on a DeFi exchange that has already demonstrated exchange-scale economics: $844 million in 2025 revenue, $2.95 trillion in volume, a 73% market share in its niche, and a token buyback mechanism that has accumulated over $1 billion in repurchased HYPE .

The GHYP ETF filing adds an institutional product layer that could broaden access to that value if approved, and the broader sector tailwind from decentralized perpetuals creates a favorable demand backdrop . But the thesis is not without cracks. ETF approval is not guaranteed, market share can erode, token unlocks can pressure price, and the emerging synthetic pre-IPO market raises regulatory questions that have no clear answers. The bull case works if high volumes persist and fee generation continues to flow into buybacks — and it weakens if any of those assumptions break.