Felix, the first HIP-3 platform on Hyperliquid, announces its shutdown.

The opening price discovery of a new IPO company on the U.S. stock market, combined with sustained trading activity from eager capital after the weekend close, led Hyperliquid to experience an epic price discovery. Record-high HYPE drew global traders’ attention to this 24/7 platform and the team behind TradeXYZ.

Hyperliquid is a high-performance blockchain designed for derivatives, featuring a fully on-chain order book. HIP-3 is its third improvement proposal: anyone can stake approximately 500,000 HYPE as collateral to launch their own perpetual futures market on this chain, trading U.S. stocks, indices, commodities, and even companies that haven't gone public. Hyperliquid provides matching, margining, and on-chain settlement, while the deployer defines which trading pairs to list, which oracles to use, and what leverage levels to set.

TradeXYZ is the first trading platform deployed under the HIP-3 framework. Within less than a year of its launch, TradeXYZ attracted Wall Street's attention through weekend market pricing and pre-IPO contract trading.

Apart from TradeXYZ, several other HIP-3 trading platforms have sequentially deployed, attempting to replicate HIP-3’s success through their respective advantages.

However, the results were not satisfactory.

Recently, the Hyperliquid ecosystem project Felix announced that its HIP-3 trading platform will begin shutting down on June 19, with all markets being liquidated individually.

Felix was the first HIP-3 platform to deploy silver and crude oil trading pairs on Hyperliquid, generating significant trading fees and approximately $3 billion in volume across the OIL, GOLD, and SILVER pairs from December last year to January this year. It is now the first to officially withdraw as a HIP-3 deployer.

Why did a once-leading player shut down first?

Felix founder 0xBroze reviewed this failed attempt.

First, the quote asset was incorrectly selected. The HIP-3 trading platform needed to choose a stablecoin for its perpetual contracts; TradeXYZ, which launched first, selected USDC—a decision that wasn’t particularly well-considered at the time, since Hyperliquid had not yet initiated its stablecoin bidding process. Felix, which launched later, naturally chose USDH, as using USDH provides a fee discount.

However, they didn’t anticipate that Hyperliquid later enabled Growth Mode, drastically lowering trading fees and erasing USDH’s advantages, turning it instead into a “burden of liquidity fragmentation.” Users held USDC but had to convert it to USDH to use Felix, and market makers were unwilling to provide liquidity for USDH-related markets. In retrospect, 0xBroze saw USDH as little more than a pawn Hyperliquid used to pressure Circle into sharing revenues.

Second, TradeXYZ arrived first. It launched on the same day as HIP-3, about a month before Felix. That month wasn’t just a time difference—it allowed the early brand to secure user attention and have ample time to momentum through the next wave of marketing.

In addition, TradeXYZ offers more trading pairs. As the only deployer using USDC, TradeXYZ has quickly built a moat through the number of trading pairs. 0xBroze believes this likely stems from a balance sheet advantage. TradeXYZ can afford the auction fees for tickers and liquidity costs, while Felix, with limited funds, must be more selective about which trading pairs to list.

Finally, there’s the “airdrop hint.” Early users of TradeXYZ began speculating that a token launch was imminent, as the team behind TradeXYZ had previously won the spot ticker UNIT in an auction on Hyperliquid. This expectation of an airdrop progressively boosted TradeXYZ’s early user base, trading volume, open interest, and liquidity, creating a flywheel that Felix could never catch up to.

We failed because we weren't TradeXYZ.

First, look at the trading volume. As of the week ending early June, TradeXYZ accounted for 95.85% of all HIP-3 trading volume. The remaining seven exchanges combined accounted for less than 5%, with second-place dreamcash at just 2.75%, third-place Kinetiq’s Markets at 0.64%, and HyENA at 0.49%.

ASXN

The concentration of open interest is higher, with TradeXYZ accounting for 96.81%.

ASXN

This monopolistic格局 has persisted almost throughout. From the launch of the HIP-3 proposal in October last year to May this year, TradeXYZ's trading volume share never fell below 60%.

In the first week of June, the total trading volume for HIP-3 reached $4.8 billion, with the XYZ100/USDC trading pair on TradeXYZ accounting for $4.53 billion alone.

ASXN

To understand why other deployers are struggling so much, you need to lay out the financials of running a HIP-3 exchange.

Two costs are clearly listed. Deploying a HIP-3 trading platform requires staking 500,000 HYPE, equivalent to approximately $30 million (at $60 per HYPE).

HypurrScan

The second cost is the ticker auction, where a ticker must be purchased via auction for each new trading pair launched, with an average auction price of around 500 HYPE, equivalent to approximately $30,000. Currently, this auction market is also monopolized by TradeXYZ, and since February, participation from non-TradeXYZ players in the auctions has steadily declined.

Blockworks Research

Starting a HIP-3 trading platform is not only costly but also offers slim profits.

To align its perpetual contract fees with those of traditional brokers, Hyperliquid introduced Growth Mode. When enabled, taker fees are slashed to extremely low levels, allowing users to open an NVDA position here more cheaply than on Interactive Brokers. The trade-off is that providers receive only about 10% of the potential fee revenue.

If a deployer does not operate a trading platform and instead directly stakes 500,000 HYPE at an approximate annual yield of 2.3%, they would earn about $60,000 per month. This means that for operating a trading platform to break even against the opportunity cost of doing nothing, the monthly fee revenue must exceed $60,000.

Here are the revenue figures for each platform in May: TradeXYZ earned approximately $3.1 million, dreamcash about $89,000, Kinetiq about $21,000, and HyENA about $16,000. The remaining platforms each earned less than $5,000.

Besides TradeXYZ, only dreamcash barely broke even. All other deployers haven’t even covered the opportunity cost of 500,000 HYPE, not to mention harder-to-quantify expenses like market making, oracles, team salaries, and liquidity incentives.

Blockworks Research

The few exchanges still standing each have their own way of surviving.

The quote asset for dreamcash is USDT0, backed by Tether. Tether provides it with approximately $200,000 in trading incentives weekly, equivalent to about $867,000 per month—far exceeding the platform’s fee income. Added to this is the expectation of an airdrop, securing dreamcash’s position as the second-highest trading volume asset.

Kinetiq Markets features a novel "crowdfunding mechanism." Kinetiq has developed a platform called Launch, which founder Omnia describes as a hybrid of "Shopify + Kickstarter," enabling others to deploy their own customized HIP-3 trading platforms using 500,000 HYPE raised through crowdfunding. Markets itself serves as a proof-of-concept for this model, demonstrating that Launch’s approach works—not as a competitor to TradeXYZ for trading volume.

Felix is unlikely to be the last HIP-3 trading platform to collapse, as there is little room left for other players to adjust.

Perhaps you could target niche or emerging markets that TradeXYZ is unwilling to touch, but Felix has already verified for everyone that the end of this path is “once you generate volume, TradeXYZ copies it and drains your value.”

Or alternatively, adopt a different distribution channel to build a user base in untapped markets, avoiding the saturated pool of Hyperliquid’s native traders—Kinetiq’s Launch is an attempt in this direction, but it hasn’t yet been fully validated.

But if cost pressures remain unchanged, the current dominant market structure is likely to persist.

Some members of the community have already proposed lowering the staking threshold from 500,000 HYPE and setting an auction price that floats with HYPE’s price but remains lower. From this perspective, a decline in HYPE’s price may not necessarily be a bad thing, as it could enable more projects to build on Hyperliquid at a lower cost.