Hyperliquid's HIP-3 Has a 90% Problem, and It's Wearing a TradeXYZ Jersey 🏷️

TradeXYZ now controls more than 90% of Hyperliquid's HIP-3 commodities perpetuals market, a concentration level that Blockworks Research says is creating structural and regulatory pressure for the protocol. HIP-3 markets are created by third-party deployers, not by Hyperliquid itself, under a revenue-sharing model that requires each deployer to lock up 500,000 HYPE, roughly $30 million, before listing. Deployers receive three free ticker slots, after which each additional listing costs 500 HYPE, about $30,000, acquired through on-chain auctions.

The dominance has already pushed at least one competitor out. Felix, an HIP-3 deployer that was the first to create silver, gold, and oil markets, announced it will shut down on 20 June. Felix said those markets generated solid fees and about 3 billion in volume during December and January before being surpassed by TradeXYZ, which launched the same products denominated in USDC.

Smaller deployers face long payback periods on their auction costs. Blockworks analyst Shauda Devens said that in a sample of 136 paid HIP-3 listings, only 44 have recovered their auction cost, with non-TradeXYZ markets showing a median projected payback period of 4 years. Felix had cited competition from TradeXYZ, internally referred to as TraderXYZ in its statement, as a direct factor in the decision to wind down operations.

Blockworks warned that deployer concentration heightens regulatory exposure for the platform, arguing that under current incentives HIP-3 is unlikely to sustain a competitive, decentralized listing market. To address this, the research firm proposed lowering the required locked HYPE for small builders and allowing small deployers to retain 100% of revenue until they have fully recovered their auction expenses, sharing with Hyperliquid only afterward.

The HIP-3 segment had previously driven more than 40% of Hyperliquid's total trading volume at its peak, fueled in part by West Asia-related volatility that pushed traditional and crypto traders to the platform for oil, gold, and silver perps during weekends. The proposed changes from Blockworks have not been adopted by Hyperliquid, and TradeXYZ has not publicly responded to the research.