Hyperliquid to launch HIP-3 upgrade for user-generated markets, unfazed by liquidations

Hyperliquid announced that its HIP-3 feature, which allows developer-generated markets, will go live on mainnet on Monday. The launch happened despite the wave of automatic deleveraging on Hyperliquid. 

Hyperliquid will go on with the launch of the HIP-3 upgrade, despite the weekend’s wave of liquidations. The new feature will go live on mainnet, allowing developers to deploy their own perp DEX markets with a different set of conditions. 

HIP-3 will allow developer teams to launch their own perp DEX on HyperEVM, against a collateral of 500K HYPE. The new feature will be released during the usual scheduled network upgrade, which is expected to take 10 minutes.

Until recently, the HIP-3 feature was in an advanced testnet stage, and has now reached the milestone of permissionless perp DEX. Deployers will also be able to set their own fee level, with a base fee share of up to 50%. They will also be able to pick their data and oracle service, and will be fully responsible for trading. 

HIP-3 will require 500K HYPE deposits

To ensure quality markets, the 500K HYPE share will be slashable in case of unauthorized behaviors or unfair trading. The launch of third-party markets arrived just after one of the biggest stress tests for perp DEX trading, which led to auto deleveraging with no way to preserve positions. The weekend’s liquidation event put a question on the ability of both centralized and decentralized exchanges to react to erratic price movements.  

The upcoming addition of builder-generated perp DEX will further increase the competition between markets. The growth of perp DEX activity was also behind the recent wave of liquidations, as it turns out a larger number of retail crypto traders were using leverage. As Cryptopolitan reported, Hyperliquid was one of the top venues for liquidations, as traders had the biggest position wipeout in crypto history.

HYPE recovers after weekend crash

Total open interest on Hyperliquid remained near an all-time peak at over $15B, despite the recent liquidations. As the market attempted a sharp recovery, Hyperliquid is one of the key venues for rebuilding liquidity. 

BTC open interest was also near its peak at over $4.27B. As a result, the native HYPE token also recovered. HYPE traded at $42.13, up over 13% in the past 24 hours. 

The increased demand for HYPE stakes for HIP-3 may lock even more coins from the market. Additionally, the market crisis set expectation for further airdrops or other tools to retain traders and preserve activity. 

HYPE also gets a boost from regular buybacks, with $3.28M put back into the market for the past day. During the market slump, buybacks happened at the $38 range. In the past month, buybacks reached over $106.5M, keeping HYPE within a relatively strong range. 

HYPE open interest is also starting to recover, jumping to $1.33B as the market showed signs that the weekend liquidation cascade may not have a lasting effect on the market.

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