Hyperliquid learns how quickly sentiment can change in crypto.
According to CryptoSlate data, HYPE, the token that powers the decentralized perpetuals exchange, fell to a seven-month low in December after a year in which Hyperliquid seemed to be the default venue for on-chain leverage.
During this period, the platform’s trading volumes have stalled, just as newer platforms have soared thanks to incentives and points campaigns. As a result, it looks like a market share story has turned against Hyperliquid.
However, two new forces are now trying to rewrite that story.
On Wall Street, Cantor Fitzgerald did just that stepped in with a 62-page initiation report that treats Hyperliquid less as a reflexive DeFi token and more as a cash flow exchange.
On-chain, the Hyper Foundation has proposed effectively burning about $1 billion worth of HYPE from a fee-funded treasury, a move intended to make scarcity as visible as the price chart.
Together, Defense and Burn outline a simple argument: Hyperliquid is not losing its core franchise, its token is structurally mispriced, and the market is staring at the wrong metrics.
The growth wall
Hyperliquid’s immediate problem is not the model, but the market scoreboard.
For much of the past year, the exchange was able to credibly claim to be the dominant DEX for perpetual futures.
However, that lead has narrowed in the second half of 2025. Aster, Lighter and edgeX have flooded their platforms with points programs and airdrop promises, attracting what Cantor calls “point tourists.” These are traders who generate volume to earn rewards instead of voicing their opinions.
As a result, the combined monthly volume of Aster, Lighter and edgeX, which was approximately $103 billion in June, skyrocketed to $638 billion in November. Over the same period, Hyperliquid’s volume barely moved, from roughly $216 billion to $221 billion.
In a market where liquidity typically follows the loudest incentives, that flat line looks like lost market share.
However, Cantor argues that this view is misleading.
The company stated that the rival platforms inflate activity with circular waxy flows, while Hyperliquid organizes “organic” trading that manifests itself in open interest, and not just in the form of a fictitious turnover.
By comparing volume to open interest, the bank tries to demonstrate that Hyperliquid users are using real leverage instead of gaming the scoreboard.
Notably, this logic has a market precedent. In previous cycles, NFT marketplace Blur and several Solana-based DEXs saw skyrocketing volume with reward schemes that didn’t always hold up once incentives waned.
Still, the quantum of the shift is hard to ignore. Even if some of Aster or Lighter’s volume disappears when the rewards reset, they will likely retain some percentage of their new power.
Indeed, Hyperliquid also used a points system before the token generation event, which weakens the claim that it stands out from the incentive game.
For now, traders vote with their keyboards. The protocol may have higher power quality, but the visible revenue growth is elsewhere.
A $1 billion HYPE burn
Against that background, the Hyper Foundation movement The “burning” of the Relief Fund looks less like a routine governance adjustment and more like an attempt to rewrite the supply narrative.
The fund accumulates HYPE which repurchases the protocol for a fee. As of mid-December, the company owned about 37 million tokens, funded primarily by about $874 million in fees generated so far in 2025, Cantor said.
These tokens are located on a special system address that has never had a private key. So restoring them would require a hard fork.
The new proposal asks validators to formalize what is already true in practice. By voting to treat the Assistance Fund address as a dead wallet and promising never to approve an upgrade associated with it, they are transforming a technicality into explicit social consensus.
On paper, this removes approximately $1 billion from the fully diluted supply and clears almost 13% of the circulating tokens.
The mechanisms do not change the economic reality that serious analysts already model. Most fundamental investors consider Assistance Fund tokens to be effectively out of circulation because no one can spend them without an explicit break at the protocol level.
But optics matter in crypto. Data aggregators and retail dashboards still count these tokens in the FDV header. Reclassifying them as burned forces these screens to converge with Cantor’s “adjusted” figures, immediately making the token screen cheaper per unit.
Is that cosmetic? Partially. The vote does not lead to new demand and does not reduce the volume. But it does harden the promise that future stewards won’t reach for that pool in a recession.
And in a market that obsessively tracks circulating supply and fire rates, tightening the denominator in the short term can still move the story, if not the fundamentals.
The ‘exchange of exchange’ thesis
Cantor’s report is intended to do the rest of the work, because when prices and volumes look weak, the bank relies on cash flow math.
It starts with Hyperliquid’s compensation engine. To date, the protocol has processed nearly $3 trillion in trading volume and generated approximately $874 million in fees, much of which is returned to HYPE through redemptions.
Taking this into consideration, the banking analysts see this loop as the on-chain equivalent of an exchange buying back its own shares. In the long run, they argue, almost all economic value accrues to token holders.
From there, the model becomes simple: If Hyperliquid can grow its offenders and establish revenues of about 15% per year over the next decade, annual volume will be roughly $12 trillion.
At current pricing schedules, that equates to more than $5 billion in annual protocol revenue. Apply a 25x multiple, which Cantor says is comparable to a high-growth stock market or fintech, and you arrive at a potential market cap of $125 billion, versus a fully diluted value of almost $16 billion today.
The statement is based on three pillars: that Hyperliquid regains its share of the perpetrators as soon as points campaigns disappear elsewhere; that its new spot location could increase DEX market share by double digits; and that its buyback engine continues to withdraw a significant portion of supply each year.
Cantor calculates that, based on his assumptions, the Assistance Fund could buy back about 291 million tokens over a ten-year period, reducing the total supply to about 666 million and pushing HYPE above $200 in ten years.
That’s a generous outcome in an industry where few projects maintain fee growth over a full cycle. Crypto markets rarely reward the logic of discounted cash flow during withdrawals; they act based on flows, stories and financing conditions.
For Cantor’s approach to work, more investors need to start treating HYPE as a proxy for stocks, and not just another altcoin with a buyback story.
Risk-weighted assets, synthetic equities and the regulatory ceiling
The biggest difference between today’s price and Cantor’s target is in the roadmap, not the present.
Hyperliquid is already using HIP-3 to turn itself from a single exchange into what its supporters call an “exchange of exchanges”: a basic order book where remote teams can launch perp markets if they stake 500,000 HYPE and accept drastic risk.
The next step, in the bullish script, is to extend that model to real-world assets.
Cantor envisions a future where Hyperliquid tokenizes stock indices, exposure to private companies and commodities, undercutting traditional brokers with fees that could fall as much as 90% below incumbent levels.
Spot trading already has a higher take rate than perpetrators, and the bank says that if Hyperliquid wins even 20% of the DEX spot flow and a slice of synthetic stock trading, spot alone could become a billion-dollar fee.
History, however, advises caution. Previous attempts to acquire U.S. on-chain equity positions, such as the Mirror Protocol, encountered securities law headwinds long before they became systemic.
Tokenized RWAs often face questions about licensing, disclosure, custody, and investor protection. So even if Hyperliquid sticks to synthetic risks rather than custodial tokens, success at scale would almost certainly attract the attention of regulators who care more about economics than protocol design.
That is the core of current market prices. Bulls see a huge, totally addressable market and a protocol willing to compress fees to capture it.
Skeptics, however, see a regulatory cap that may not appear on a spreadsheet but will weigh on any attempt to expose Apple or Nvidia to a non-consensual chain.
For now, the tension remains unresolved. The foundation has offered a burn to sharpen the scarcity story. Cantor has provided a model that treats HYPE as a cash flow exchange company with room to grow multiple times.
The charts, meanwhile, continue to show a token under pressure and a venue fighting to keep its place in a market obsessed with incentives.
Until Hyperliquid can prove it can grow again on terms closer to its own, investors will likely view the burn and bullish note as a defense of the bottom, rather than a catalyst for a new high.
