Author: DeFi Warhol

Translation: AididiaoJP, Foresight News

There are many perpetual contract decentralized exchanges in the market today, but only one automatically uses nearly all of its revenue to repurchase its own token on the open market.

This is my entire thesis on Hyperliquid, summarized in one sentence:

If you believe trading volume for perpetual DEXs will continue growing, then HYPE is one of the purest and most leveraged ways to gain exposure to that trend.

Below are my personal thoughts on how Hyperliquid operates and how its current token design might evolve in the future.

Summary

• Hyperliquid's daily trading volume has reached tens of billions of dollars, with annualized revenue exceeding $1.3 billion.

• 97% of all fees are routed to an automated "Aid Fund" that buys HYPE on the open market.

• The fund has already spent over $600 million repurchasing HYPE and holds a significant amount of tokens.

• The risk and reward lie in whether Hyperliquid can sustain trading volume and maintain its 97% buyback policy.

• Based on simple assumptions about volume and market share, I’ve derived rough price scenarios:

• Bear case: $45–50

• Base case: $80–90

• Bull case: $160–180

Current State of Hyperliquid

To better understand where Hyperliquid is headed, we need to examine its current status.

Here are some quick data points:

• Perpetual contract trading volume: ~$8 billion+/day

• Annualized revenue: ~$1.2–1.3 billion

• HYPE market cap: ~$10 billion

• HYPE fully diluted valuation: ~$38 billion

• Staked HYPE: ~42%

• Aid Fund balance: 35 million HYPE

Core Mechanism: 97% of Fees Automatically Used for Buybacks

This is the most important part of the bullish argument.

Hyperliquid uses protocol trading fees to fund HYPE token buybacks.

Traders pay fees for perpetual and spot trading.

These fees are routed to the Aid Fund.

The Aid Fund is programmed to continuously use approximately 97% of all exchange fees to buy back HYPE tokens on the open market.

Volume increases → Fees increase → Buybacks increase

In other words, nearly every dollar the exchange earns becomes a mechanical buying pressure for HYPE.

Besides that:

On HyperEVM, gas fees are paid in HYPE.

Base fees follow an EIP-1559-style mechanism, meaning part of the HYPE is burned, adding another deflationary channel.

So:

• 97% of trading fees → HYPE buybacks

• HyperEVM gas fees → HYPE burn

• Staking → HYPE locking

HyperEVM

Hyperliquid originally started as a custom perpetual protocol. Now it also has HyperEVM, an EVM layer where:

• Users pay gas fees in HYPE

• Base fees are burned

• On-chain applications (perpetual frontends, HIP-3 markets, other protocols) create additional demand for block space and HYPE.

I view HyperEVM as a second engine:

• Engine 1: Perpetual trading volume → Fees → 97% buybacks

• Engine 2: HyperEVM activity → HYPE gas fees → Burn + more fees

Scenario Modeling

Current state:

• Total perpetual DEX volume: ~$38 billion/day

• Hyperliquid volume: ~$8 billion/day (~20–22% share)

• Fees: ~0.04% (assuming most traders are takers)

• Annualized fees: $1.3 billion

• 97% used for buybacks: ~$1.2–1.25 billion/year

• Market cap: $10 billion

• Thus, market cap / buyback ratio ~8.5x

Then I assume:

• The market continues to value HYPE at roughly the same buyback multiple (~8.5x)

• Perpetual DEX volume grows

• Hyperliquid maintains or gains market share

Scenario 1: Bear Case

Bear case: Perpetual DEX traffic grows, but Hyperliquid only maintains its share. Under this framework, HYPE’s eventual price would be in the mid-$40s to $50 range.

Assumptions:

• Total perpetual DEX volume: 1.5x today’s level

• Hyperliquid share: flat

Results:

• Annualized buybacks: ~$1.8 billion

• At 8.5x market cap / buyback ratio → implied market cap ≈ $15.4 billion

• Circulating HYPE ~337 million → implied price ≈ $45–50

Scenario 2: Base Case

Base case: On-chain perpetual trading volume doubles, Hyperliquid gains market share, HYPE price lands in the $80–90 range.

Assumptions:

• Total perpetual DEX volume: 2x today’s level

• Hyperliquid share: ~30%

Results:

• Annualized buybacks: ~$3.34 billion

• At 8.5x → implied market cap ≈ $28.4 billion

• Circulating HYPE ~337 million → implied price ≈ $80–90

Scenario 3: Bull Case

Bull case: On-chain perpetual trading volume triples, Hyperliquid becomes the dominant platform. At the same 8.5x multiple, HYPE reaches the $160–180+ range.

Assumptions:

• Total perpetual DEX volume: 3x today’s level

• Hyperliquid share: ~40%

Results:

• Annualized buybacks: ~$6.68 billion

• At 8.5x → implied market cap ≈ $56.8 billion

• Circulating HYPE ~337 million → implied price ≈ $160–180

Important note:

These are not price targets. They do not include additional upside from HyperEVM gas fees, new products, overall market sentiment, or any change in multiples (up or down).

They simply show:

• Using the current fee/buyback economic model

• Applying a fixed 8.5x market cap / buyback ratio

• Letting volume and market share drive changes in buyback numbers

Assuming a full altcoin season by 2026 and that the bull case materializes, I believe $250 is a realistic number for HYPE.

Why I’m Bullish

Here’s why this setup feels compelling to me:

• Real, visible cash flow: Hyperliquid already collects over $1.3 billion annually in protocol revenue and routes ~97% of it into HYPE buybacks.

• Simple, aggressive design: Routing 97% of all exchange fees into an Aid Fund that buys back HYPE on the open market is about as pure as tokenomics can get.

• Growth of perpetual DEXs: On-chain perpetual contracts are genuinely taking share from centralized exchange derivatives. Hyperliquid consistently leads in daily DeFi revenue and buybacks.

• HyperEVM’s potential value: More apps and HIP-3 markets mean more HYPE gas fee consumption + more fee streams flowing into the same Aid Fund.

Combined: Volume growth + high fee share + 97% buybacks + 8.5x multiple—if Hyperliquid continues performing well, this creates a very clear and logical path for price appreciation.

Final Thoughts

For me, the bullish case for HYPE isn’t “number go up” because of narrative, but:

• A highly liquid and deep perpetual DEX + L1 combo that already generates billions in volume.

• A token model where ~97% of trading fees are mechanically recycled into HYPE buybacks.

This is the foundation of my extremely bullish stance on HYPE.