Is Hyperliquid the new frontier for innovation?

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One of the key things I like to track in crypto is a subjective criterion I call “where are new interesting developments and proposals taking place.” There are plenty of dashboards and analytics sites for this, the most popular being the Electric Capital site. The issue is that it still shows Polkadot as having a lot of developers. (At Blockworks we solved the noise problem with active users; maybe we can try the same for active developers.) Because of this noise, I prefer to track two simple observations:

• What is the velocity of new products launching, and how much mindshare are these products capturing?
• Are many people getting nerdsniped into discussing the novelties and intricacies of the chain?

A related point is the caliber of people being attracted to new ecosystems.

For example, over the past few years, Solana (and Ethereum) attracted the majority of talent. Talent generally goes where:

• It can solve interesting problems or create interesting projects.
• It can make a lot of money.

In a podcast I did with Icebergy about a year ago, we discussed how crypto still wasn’t attracting talent at the levels AI was, despite offering faster exits and more money. AI was (and probably still is) more interesting to most talent and seen as more prestigious. After FTX, crypto lost a lot of credibility and has only recently started recovering as larger institutional players re-entered. Apart from FTX, crypto has also been criticized for being full of low-effort forks and limited utility products. This dynamic isn’t unique to crypto though. Many AI companies are also just building wrappers around GPT, which is as uninteresting as some projects in crypto.

Anyway, to the point: Historically, Solana has captured the majority of attention from talent and developers. Regardless of personal views, launchpads, internet capital markets (RIP), creator capital markets, TCGs and prop AMMs have been popular over the past year, drawing developers to the ecosystem. They offer opportunities to solve problems, build products, and make money.

Solana continues to attract talent. There’s still a lot of money on the chain, high velocity of that money, and constant issuance of new tokens. Developers want to capture some of that revenue by building something unique, slightly different, or just a variation with new incentives. Ethereum has had this dynamic too, and still does. Many new AMM structures were first developed on Ethereum and by Ethereum-native founders. More recently, interest has grown in prediction markets. Many who once focused on perpetual markets have shifted to writing about prediction markets as well.

Beyond this, the main point of today’s note is that Hyperliquid has been gaining increasing attention from builders and talent. In a recent podcast with Charlie from Felix, we talked about how many of the basic elements of the L1 HyperEVM have already been built. A common criticism Charlie recognized is that most HyperEVM projects are forks or ports of existing products. This criticism is common for new chains, and it makes sense: Every new chain needs certain basic elements to function properly, such as lending markets, AMMs, bridges and so on. Still, aside from the HyperEVM, we’re also seeing growing interest in Hypercore from both talent and researchers.

This is reinforced by the large number of articles and research written on HIP-3.  Bedlam Research has also discussed HIP-3 implementations previously, specifically discussing:

• Risk tranching and delegated staking: Builders can pool HYPE from multiple holders, letting them share in fees while managing exposure through senior and junior tranches that take on different levels of slashing risk.
• Fees and fee structure experiments: Instead of only rewarding stakers, fees can incentivize liquidity providers and takers, or be tokenized into yield streams; alternative fee schedules like charging only on winning trades are also possible.
• New market types: HIP-3 allows deployment of markets beyond crypto, including equities, commodities, leveraged tokens, asset baskets, pair trades, event-contingent markets and even markets tied to DEX fee performance.
• Collateral management: Since HIP-3 DEXs are siloed, collateral cannot easily move across venues; prime brokerage-style services could emerge to consolidate risk, transfer collateral, and provide margin financing across multiple DEXs.

In its HIP-4 proposal posted yesterday, Bedlam discussed how to extend builder-deployed perps into a format suited for prediction markets. It proposes Event Perpetuals as a way to address HIP-3’s limitations, since continuous oracles and capped price adjustments do not work for binary events that resolve instantly. The design represents probabilities directly on the order book, with values between 0 and 1 reflecting the likelihood of a “YES” outcome.

In practice, it operates like this:

• Binary payoff, settling at either 0 or 1 once the event resolves.
• No continuous oracle or funding, prices set only by trading.
• Isolated 1x margining, with collateral depending on buying YES or NO.
• Opening auction to determine the first market price before trading begins.
• Continuous trading within bands of 0.001 to 0.999, no leverage.
• Resolution through a single oracle update, with optional dispute window.
• Settlement by halting trading, canceling orders, and closing positions.
• Builders stake 1 million HYPE to deploy markets and define event details.
• Markets can be recycled after resolution, and builders can set extra fees.

I highly recommend that anybody reading today’s newsletter check out Bedlam Research. I also encourage you to think about what edge your ecosystem or chain really has. As more chains have launched and gotten faster, differentiation is less about raw tech and more about something else. Many chains fail simply because they are designed to fail. They launch with an “innovation” that is irrelevant (15K TPS vs. 13K is not innovation) or uninteresting (for example, another restaking-focused chain).

Ask yourself: Are you investing in products, applications or tokens on chains that are actually nerdsniping developers and talent? Are there interesting, novel applications and features being discussed? If not, take a step back and ask why. Why is talent ignoring your chain?

Crypto is one of the easiest ways for developers and engineers to make money. If talent doesn’t think they can make money on a chain, consider two things: (1) will this change in the future? (2) are you looking in the wrong places?

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