From Trading to Buybacks: How Hyperliquid Built a Self-Sustaining System

Author: 137Labs

The decentralized perpetual contract sector entered a clear watershed phase in 2026.

After a prolonged period of subsidy competition and liquidity battles, the market is beginning to refocus on a more fundamental issue:

Which protocols truly have the ability to transform transactions into sustainable value?

Against this backdrop, the focus of discussion surrounding Hyperliquid has gradually shifted from "transaction volume growth" to more fundamental structural issues— whether revenue is stable, how profits are distributed, whether supply is controllable, and whether its market position is sustainable in the long term .

This article will focus on four core dimensions: profit structure, buyback mechanism, team unlocking process, and market share , attempting to reconstruct the true value loop that Hyperliquid has currently built.

Profit Structure: From Traffic-Driven to Cash Flow-Driven

Hyperliquid's core revenue stream is heavily reliant on perpetual contract trading fees.

Unlike decentralized protocols that rely heavily on incentives, its trading activity is not entirely based on subsidies, but rather on matching efficiency, liquidity depth, and attractiveness to professional traders.

In early 2026, a noteworthy change was the significant increase in trading activity for non-crypto asset themes (especially precious metal contracts) . This type of trading was not entirely dependent on crypto market sentiment, but rather resembled traditional derivatives trading behavior, structurally enhancing the stability of platform fee revenue.

This is crucial because it means that Hyperliquid's revenue is not tied to a single market cycle, but rather it is trying to expand to a wider range of trading demand sources.

Based on the results, Hyperliquid has already exhibited the characteristics of a "revenue-generating protocol":

Increased transaction volume leads to higher transaction fees, which in turn create a sustainable cash flow from the agreement.

Profit Flow and Buyback Mechanism: How Value Returns to the Token Layer

Unlike many DeFi projects that opt ​​for “high-emission incentives,” Hyperliquid takes a path closer to traditional finance: systematically using protocol revenue to buy back HYPE .

Its operational logic can be summarized in three steps:

1. Perpetual contract fees generate agreement revenue.

2. Income is deposited into a dedicated fund pool (usually known as an Assistance Fund).

3. The fund pool continuously repurchases HYPE in the secondary market, accompanied by burning or long-term locking.

The importance of this design lies not in "how high the proportion is", but in the continuity and traceability of the repurchase behavior .

The buyback is not a one-off event, but rather occurs dynamically as trading activity changes, thus establishing a direct link between token value and platform performance.

Structurally, this mechanism has two significant impacts:

Platform growth is no longer just reflected in "data usage," but is translating into real buying activity.

The pricing logic of HYPE is beginning to converge towards that of "cash flow-mapped assets".

In the current DeFi ecosystem, this type of design remains relatively scarce, which is an important reason why Hyperliquid has gained more fundamental attention.

Team unlocking process: Is the supply pressure overestimated?

Regarding the team unlocking issue of HYPE, the common discussion in the market often focuses on "whether the unlocking date is approaching", but this perspective alone is insufficient to assess the real risks.

More importantly, there is the unlocking structure and the behavior after unlocking.

Based on publicly available information, HYPE's team and core contributors' tokens are gradually entering circulation using a clamping and linear vesting approach, rather than being released in a concentrated manner. This means that the new supply is smoothly distributed over time, allowing the market room to absorb it.

More importantly, the theoretical unlocking volume does not equal the actual selling pressure .

During the historical unlocking window, some unlocked tokens did not immediately enter the secondary market, but continued to participate in staking or ecosystem activities, resulting in the actual sell-off scale being significantly lower than the new circulating supply.

In this process, the repurchase mechanism at the agreement level played a hedging role:

When unlocking occurs, if the repurchase size can cover potential selling pressure, the impact of supply shocks on the price structure will be significantly weakened.

Therefore, unlocking itself is not a systemic negative factor; what really needs attention is:

Whether the net selling after unlocking continues to exceed the absorption capacity of repurchases and new demand .

Market share: Is market leadership sustainable?

Hyperliquid has long held a leading position in the decentralized perpetual contract market, but describing its market position solely by "trading volume share" is insufficient.

Even more explanatory is the combination of two dimensions:

• Trading volume: Reflects market activity and participation frequency

• Open Interest: Reflects the actual willingness of funds to remain in the market.

Compared to trading volume, which is easily inflated by short-term incentives, open interest is a better indicator of a platform's capital stickiness. From this perspective, Hyperliquid's leading position across multiple time windows suggests that it attracts not just short-term traffic, but also consistently held trading funds.

Its competitive advantage is not due to a single factor, but rather a combination of multiple factors:

• Market depth and matching efficiency create path dependence for professional traders

• The network effect brought about by economies of scale is constantly strengthening

The buyback mechanism feeds growth back to the token layer, enhancing long-term expectations.

This makes Hyperliquid closer to an "on-chain derivatives infrastructure" than a functional product that is easily copied.

Does the value loop hold true?

Combining these four dimensions reveals a clear logical chain:

1. Market share and trading activity bring stable commission income.

2. Fee income is converted into continuous repurchase through a capital pool.

3. The potential pressure from buybacks on the supply side to offset and unlock supply-side risks.

4. The stability of the supply and demand structure, in turn, supports the platform ecosystem and capital retention.

The advantage of this structure lies in its high transparency, verifiability, and independence from a single narrative.

However, its vulnerabilities also need to be pointed out:

The entire system is highly dependent on trading activity .

If the market enters a prolonged period of low volatility, the demand for derivatives will decrease, and the intensity of repurchase agreements will also weaken. This is a core risk that this model cannot avoid.

In conclusion

If you only see Hyperliquid as a "fast-rising token", you can easily miss the key points.

What's even more noteworthy is its attempt to turn on-chain derivatives into a business with cash flow, returns, and discipline . This is not common in DeFi.

The long-term value of HYPE does not depend on short-term market conditions, but on whether this chain can continue to operate in different market environments.