Hyperliquid's High Profits and the Zero-Sum Reality Behind the Scenes

Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010)

Recently, an interview article with the founder of Hyperliquid went viral. On this Bloomberg podcast, Hyperliquid’s founder Jeff described the long-term vision of this 11-person team, generating $100 million in annual revenue per person, as becoming “the AWS of finance, not a replacement for Wall Street.” He also argued that Hyperliquid is akin to the TCP/IP protocol, and regulation should reside at the layer with control—that is, with the HIP-3 and HIP-4 market deployers. While this perspective appears consistent with the role of protocol infrastructure, it somewhat obscures Hyperliquid’s responsibilities as a market participant.

Behind Hyperliquid’s astonishing revenue, the buyback and burn of the HYPE token has exceeded $4 billion. Many regard Jeff as a创业 idol, and view Hyperliquid as the “best innovative product in the crypto industry.” Yet few notice that the bloody cost of this profit machine has been paid by countless retail traders and numerous on-chain crypto whales. As the crypto industry enters its 17th year, Hyperliquid appears to be striving to align with U.S. equities, TradeFi products, and RWA assets, vying for pricing power in traditional capital markets—but at its core, it may simply be a CEX repackaged under the name of a Perp DEX.

Looking back at Hyperliquid’s wealth-creation miracle and the halo of its star projects, it is in fact built on a foundation of bloodshed and ruthless exploitation—a bloody casino. We have no intention of criticizing or condemning existing platforms or products, nor do we seek to challenge the timeless, ironclad rule of self-responsibility for profits and losses in the crypto market. But perhaps, beyond the on-chain ecosystem racing forward under the guise of innovation, people also need to see who is paying the price for progress and financial innovation.

Recently, Hyperdash founder Hanson Birringer published a lengthy article exposing the harsh reality faced by Hyperliquid’s true users: according to data tracked by the organization from nearly 400,000 retail wallets connected to Hyperliquid via six consumer-facing applications—Phantom, MetaMask, Rabby, Trust Wallet, Invo, and fomo—these users have collectively lost approximately $280 million; about $126 million of this loss occurred after November 10, 2025 (during Hyperliquid’s rapid expansion phase), while the remaining losses occurred before November 2025 or on Hyperliquid through transactions not conducted via these apps.（Recommended reading:“Behind Hyperliquid’s Massive Consumer Expansion, 400,000 Retail Users Lost $280 Million”）

In terms of loss composition, fees account for over 50% of losses (particularly in the $126 million loss over the past year, where fees made up more than half); applying the Builder Fee on top of the base rate results in a cost of approximately $0.065–$0.145 per $100 order.

In terms of user profiles, the five apps show typical single-wallet deposits of only $30–60, with Rabby users depositing larger amounts and being more likely to profit.

On the other side, user retention on these third-party independent channels is extremely poor: monthly active growth relies primarily on new user acquisition, with only about 1 in 7 new traders remaining after three months; most users stop trading after incurring losses. In other words, within about three months, nearly 86% of users are harvested and promptly leave.

In addition, the rapid turnover of funds has become a defining trading characteristic of this user group: Invo users deposited approximately $12.4 million but generated trading volumes of about $5.8 billion. Regarding specific asset classes, BTC was the market with the highest losses (transaction fees even exceeded users’ closing profits); HIP-3 and small-cap altcoins incurred higher dollar-based trading losses.

Like a casino business model, Hyperliquid's third-party C-end application growth also heavily relies on continuous user acquisition, with nearly all retail users contributing substantial fees before "being pumped and dumped," similar to past DeFi, GameFi, SocialFi, and NFT trends.

It’s not just retail traders—crypto whales in the Hyperliquid ecosystem also can’t claim constant wins. Once whales place visible orders, they often immediately become targets for “whale hunters.” Countless past cases have shown us: don’t announce your profits, or you’ll get wiped out.

Over the past two years, I have been the Odaily Planet Daily reporter who has written the most “insider whale profit and loss records,” without exception.

During last year’s “10/11 epic crash,” I wrote an article on the insider whale, and the address was later confirmed to belong to Garrett Jin. Although he initially profited $200 million from heavy shorting, he soon began incurring losses, particularly on long positions in ETH, where he once lost approximately $250 million, leaving his Hyperliquid account with just about $53.

On Hyperliquid, where on-chain positions are nearly transparent, Garret Jin has never been an exception.

Originally, James Wynn earned the nickname "Hyperliquid Whale" through profits exceeding $87 million and positions in the billions of dollars, helping to popularize the "Hyperliquid crypto whale" niche. However, he soon declined along with the highly volatile crypto market, even resorting to promoting tokens, giving trading signals, and earning commissions. For full details, read “From Whale to Ant: The Fall of On-Chain Contract Legend James Wynn?”.

Subsequently, the “50x leverage insider whale” @qwatio was doxxed by on-chain detective ZachXBT, with his real identity suspected to be a fraudster who previously made headlines in British newspapers. See 《50x Hyperliquid Whale’s Identity Revealed: Is He the Fraudster Who Made UK News Headlines?》.

The "100% Win Whale" once dominated the scene, but ultimately fell short in the futures market, leaving behind only the record: "100% WIN Whale (Not anymore)".

Maji is another prominent "Hyperliquid whale" who has remained active in the market. We recently summarized his latest "liquidation diary" — see “Big Brother Maji: Oh No, I’m Being Targeted Again”. Previously, he was liquidated seven times within just ten hours in a single streak, and in his most recent round, he once again gave back the millions of dollars he had painstakingly accumulated. Latest data shows that his primary address has accumulated total profits and losses of approximately $37 million.

Around November 2025, statistics showed that multiple highly leveraged whales, including so-called “insider whales” and “rollover whales,” gradually lost all their profits after accumulating tens of millions in gains, with average losses exceeding $40 million per individual.

Isn’t the truth clear by now? So-called crypto whales are, at best, consistent contributors to trading fees and platform liquidity—not the “smart money” many believe to be blindly followable. Compared to most people, they’re merely larger-sized retail investors who’ve always had access to off-exchange funds and can continuously deposit.

In fact, perpetual contracts have always been a classic zero-sum (or negative-sum) game, where long and short positions offset each other’s profits and losses. Hyperliquid and third-party applications (so-called Builders) generate revenue by collecting fees (the negative-sum portion), while as the underlying protocol, Hyperliquid already earns substantial profits from trading fees and market deployment fees alone.

Regarding HIP-3, HIP-4, and other contracts that allow third-party deployment in markets such as prediction markets, these merely expand the “in-market coverage” from cryptocurrencies to assets like stocks, commodities, and predicted events—but have never altered the core business model of “zero-sum gaming + fee extraction.”

Moving from a CEX to a Perp DEX (such as Hyperliquid, Aster, etc.) is still essentially about harvesting liquidity and trading fees; the underlying matching engine, risk management, and liquidation logic are similar, with the main differences lying in on-chain settlement and transparency.

This point was also deeply analyzed in the article “Perp DEXs Generate $125 Million in Monthly Fees—Who Is Really Rewarded?”: the value from related fee revenues is disproportionately directed toward platform token holders rather than traders who actually contribute order flow. Data shows that over 30 days, 38 Perp DEXs generated approximately $125 million in fees, with Hyperliquid alone accounting for $84.55 million—roughly 67.6%—while the top five platforms combined accounted for 85.6%. Among these, Hyperliquid repurchases and burns approximately 97%-99% of its fees under the name of the Assistance Fund to reduce HYPE supply; in contrast, about 86% of HYPE holding addresses have never participated in perpetual contract trading, revealing a clear misalignment between those who generate revenue and those who benefit from token value.

Regarding the prior heightened attention from traditional financial markets due to Cerebras (CBRS)’s pre-market pricing, it now seems difficult to prove that on-chain Perp DEX platforms like Hyperliquid can firmly hold pricing power in capital markets.

In October 2026, the International Monetary Fund (IMF)’s Global Financial Stability Report noted that the characteristics of equity tokenization trading are as follows:

• More than half of tokenized U.S. stock trading occurs outside regular trading hours;
• Approximately 80% of trading volume is less than one share (clearly indicating retail participation);
• Tokenized stocks exhibit volatility approximately 1.5 times that of the underlying stocks, with lower liquidity and a more fragmented market;
• Overnight price movements contain some meaningful information, but within the first 5 minutes after open, traditional stocks absorb approximately 85–99% of the volatility from tokenized overnight moves;
• The market size remains small, at approximately $2.3 billion (as of the end of July this year), presenting liquidity, legal, and clearing risks.

Although the discussion centers on tokenized stock trading, it is evident that TradeFi’s on-chain derivatives contracts have relatively limited influence on traditional financial markets; platforms like Hyperliquid and other on-chain Perp DEXs currently lack a decisive advantage in this area, demonstrating only marginal “predictive” potential through a very few isolated cases.

In summary, in my view, Hyperliquid remains a rare phenomenon in this cycle of the crypto market, but it is still far from becoming the so-called "AWS of finance"—its business model inherently prevents it from serving as underlying infrastructure, and it has always been nothing more than an "alternative casino with a rebranded CEX."

I certainly acknowledge the achievements Jeff and Hyperliquid have made so far, but the retail traders and whales who have silently borne the corresponding costs also deserve to be seen by more people.

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