How Hyperliquid Becomes the Backend for ALL of Finance | Tushar Jain

Multicoin Capital believed the market was deeply mispricing HYPE at $63 by viewing Hyperliquid too narrowly as a fast-growing perpetuals DEX rather than as a potential everything exchange where anyone anywhere can get exposure to any asset, event contract, or derivative. Tushar Jain's single most important reason for bullishness is portfolio margining, which allows one collateral account to automatically net across multiple derivatives positions without requiring additional collateral postings. This creates a compounding return to scale because competitors launching identical products cannot easily replicate existing cross-margin balances, and having assets already on platform makes it marginally easier to sell the next financial product since no new deposit action is required.

HIP3 represents the platformization of Hyperliquid, removing the core team from deciding which markets get listed and replacing that with a permissionless system where deployers post a bond of 500,000 HYPE to gain the ability to deploy markets and keep half the fees earned from traders. HIP3 volumes grew from essentially nothing to approximately one third of total Hyperliquid volume within months, and Jain predicts HIP3 and HIP4 will ultimately represent the vast majority of platform volume. Builder codes allow third-party front ends to route order flow to Hyperliquid and receive a percentage of trading fees, and Jain describes HIP3 and builder codes as two sides of the same coin representing supply-side and demand-side product decentralization respectively. Wallets like Phantom and MetaMask are better near-term candidates for builder code integration than Coinbase because they are in the business of routing users to best execution rather than executing trades themselves.

The DeFi mullet model Jain describes involves localized centralized front ends handling user acquisition and regulatory engagement sitting on top of a DeFi global liquidity backend, and he views this as the likely end state for global finance. Hyperliquid lacks direct banking on-ramp relationships unlike Coinbase, but Jain believes stablecoin on-ramp proliferation will be sufficient to overcome this gap. CME is suing the CFTC for approving onshore perpetual futures contracts, which Jain interprets as evidence of product-market fit, though the host noted that incumbent opposition has historically slowed the crypto industry and represents a bear case risk.

Jain argues that volume is the easiest metric to fake on an exchange because two parties can trade back and forth at the same price infinitely, and that net trading fees after subtracting rebates and open interest are more meaningful metrics. Liquidations carry a penalty that cannot be faked and represent the truest measure of real directional risk-taking, and Hyperliquid has a much higher ratio of liquidations to trading volume compared to its main competitors Astra and Lighter. Lighter trades at a 6.5x trailing twelve-month revenue multiple while Hyperliquid trades at an 18x multiple, roughly a 3x premium that Jain attributes to market judgment on revenue durability and margin quality.

Multicoin's valuation framework used three scenarios built on total crypto derivatives volume having grown at approximately 45% annualized over the past five years. The base case assumes 35% annual growth going forward, DEX share of crypto derivatives rising from the current 16% to 32%, and Hyperliquid holding its DeFi derivatives open interest share constant at 30%, which Jain describes as very conservative given the current 59% share. The base case produces a price target of $319 on 502 million adjusted token supply, implying over 5x upside from the $63 entry price. The bear case assumes 10% volume growth and 20% DEX share, while the bull case assumes 50% growth and 50% DEX share.

Hyperliquid's value capture is described by Jain as the strongest in crypto because the relationship between revenue and token value is direct and unambiguous. Revenue goes to buy and burn HYPE, staking HYPE is required to deploy on HyperEVM, and priority fees on HyperEVM are paid in HYPE, with no separate equity entity and no governance token ambiguity of the kind that affects older protocols. Core contributors were allocated roughly 24% of total HYPE supply, vesting at approximately 10 million HYPE per month through 2028, equal to around $625 million per month at $63 per token. Jain argues the more meaningful team risk is not the unlock schedule itself but whether roughly 14 employees who built a project now worth approximately $60 billion in fully diluted valuation remain motivated after reaching generational wealth, and he treats the continued pace of execution as the primary evidence that motivational collapse is unlikely.

Jain describes a four-step path by which Hyperliquid could eventually access US markets without itself becoming a registered entity. Step one is US legalization and regulation of perpetuals, with Kalshi's approval cited as an early signal. Step two requires passage of something like the Clarity Act, which would enshrine DeFi safe harbors from broker registration requirements. Step three requires Hyperliquid to satisfy Clarity Act conditions such as open-sourced code and a sufficient validator count. Step four involves regulated US front ends using builder codes to permissionlessly route volume to Hyperliquid as a compliant DeFi backend. Jain is explicit that this path will take years, and notes the Genius Bill does not take effect until January 2027 due to rulemaking and comment periods. He also flags that even if Hyperliquid remains technically offshore, securing protections under US law would be strategically valuable as a defense against a less friendly future administration.