The HYPE Flywheel: Expanding Protocol Usage, Buybacks, Institutional Demand

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HYPE - the native token of the Hyperliquid network - recently achieved a new all-time high of $74.19, only days after setting its previous all time high. It flipped Dogecoin (DOGE) in the process, becoming the 9th most valuable cryptocurrency by market capitalization. 

All of this comes during a wider market downturn as BTC and ETH continue to slide amid an uncertain economic and geopolitical backdrop. 

There are several reasons why HYPE is outperforming the wider market, many of which we outlined in a previous article. The gist of that article was that impressive network usage, institutional adoption, TradFi disruption and an all-encompassing “super-app” narrative are creating positive sentiment around the Hyperliquid ecosystem. 

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When you combine the above-mentioned factors with HYPE’s Assistance Fund buyback scheme, you get a positive flywheel. In the next section, we discuss what the Assistance Fund is and the role it might be playing in driving HYPE price action. 

What Is The Assistance Fund?

The Assistance Fund is a protocol buyback mechanism where up to 99% of all Hyperliquid’s trading fees from spot and perpetual markets go towards buybacks of the HYPE token. The HYPE is bought back from the open market. In Q1 2026, the protocol bought back $192.25 million HYPE. 

Diversified Network Revenue

A key component of this flywheel is the emergence of commodities, stocks and pre-IPO contracts on Hyperliquid. These contracts mean Hyperliquid’s usage has grown, despite a broader crypto bear market.

Recent geopolitical instability brought huge volumes to the Hyperliquid ecosystem, introducing thousands of new traders to perp DEX trading.

According to research from Grayscale, in February, Hyperliquid silver perps reached more than $4 billion of daily volume. This momentum accelerated on April 9th during the crisis in the Middle East, when 24-hour volume for oil perps surged past $4 billion - briefly surpassing Bitcoin's perp volumes.

As detailed in our article on perpetual oil contracts, massive volumes of oil were traded on the Hyperliquid around the breakout of the war. Because Hyperliquid enables continuous 24/7 trading, it became the primary venue for crucial oil price discovery over the weekend, a period when legacy markets are completely closed.

Since launch, HIP-3 volume exceeds $275 billion traded with over 140 HIP-3 trading pairs currently active. With much of this being re-routed towards buybacks by the Assistance Fund protocol, the HYPE token itself also benefits from HIP-3 volume. 

Institutional Inflows and ETFs

Institutional interest provides additional momentum. Bitwise, Grayscale, and 21Shares are key institutions soaking up HYPE liquidity. Grayscale’s ETF has yet to launch, but Grayscale has been accumulating HYPE in anticipation of launch. You can track inflows as they settle on-chain using Arkham Intel. The screenshot below shows recent inflows to Bitwise’s BHYP ETF address. It currently holds $40 million HYPE.  

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According to data from SoSoValue, US spot HYPE ETFs have total net assets of $122 million since their launch on 12th May. This fresh institutional capital adds momentum to the flywheel by absorbing supply on the open market and driving up price, which attracts more traders to the USDC/HYPE trading pair who then drive up liquidity on the network. 

Pre-IPO Markets

The ability to trade pre-IPO stocks on Hyperliquid also drives network usage, and adds further momentum to the flywheel. These markets offer diversification into private equity speculation to traders who were previously locked out. 

Trade.xyz is the leading provider of pre-IPO perpetuals on Hyperliquid. Trade.xyz is a decentralized perpetual DEX built on the Hyperliquid Layer-1. The SpaceX perpetual contract provided by Trade.xyz currently has an open interest of $65 million.

Pre-IPO perps can give a live read on where the market expects a company to list. The recent Cerebras listing showed how close that read can be.

Trade.xyz launched a Cerebras perpetual on 1 May at a $175 reference price. Cerebras priced its IPO at $185 on 13 May, and the stock opened at $350 the next morning, almost double the offer price.

The on-chain contract stayed close to the real number. Shortly before the open it traded around $340, within roughly 3% of the $350 opening print. The IPO itself was priced at $185. So the perp's pre-open mark was far closer to where the stock actually opened than the official offer price was. 

This shows the on-chain price held its anchor to the company's market value right up to listing. If perps for SpaceX, Anthropic and OpenAI stay as well-anchored, Hyperliquid could earn a credibility that feeds the "super-app" narrative.