Assessing the Appropriate Value of HYPE (Hyperliquid) in 2025: Determining a Just Market Price

Hyperliquid, a new performance-optimized Layer 1 blockchain specifically designed for trading, is generating increasing interest among crypto enthusiasts. The protocol's native token, HYPE, is at the centre of this buzz, driven by soaring trading volume and ecosystem diversification.

A Multi-Dimensional Approach

Hyperliquid operates across three key dimensions: Perpetual DEX revenue, Spot trading revenue, and Layer 1 chain value. The valuation of this multi-vertical protocol is based on a Sum-of-the-Parts (SOTP) model, a concise method used to value complex businesses.

The SOTP model yields a range of implied token valuations for each vertical, which are then summed to give a total implied valuation. For instance, Hyperliquid's token could justify double-digit valuations from the Perpetuals vertical alone, assuming a 15x revenue multiple.

A Look at the Numbers

The valuation range for Hyperliquid, including revenue from spot markets, Perpetuals, and the L1 chain, adjusting for circulating supply, revenue share, and multiple ranges, is projected to be between $38 and $59. This valuation range aligns with current circulating supply estimates (920-950M HYPE).

Early 2025, Hyperliquid's daily Perpetuals volume reached more than $700 million, making it one of the highest-volume DEXs. However, it's important to note that the valuation doesn't include the optionality of ecosystem incentives, protocol revenue sharing, and potential real-world integrations.

The Team Behind Hyperliquid

Hyperliquid is the brainchild of a team founded by Harvard alumni and engineers from Google, Citadel, Caltech, and MIT. The founder, Jeff Yan, is a former algorithm developer, while Molecular Labs, acquired by Paxos, is involved as the developer behind key Hyperliquid infrastructure components.

Risks and Opportunities

While Hyperliquid presents promising opportunities, it's not without risks. Unclear token unlock schedules, volume sustainability, ecosystem depth, regulatory ambiguity, and competitive pressure are among the challenges the protocol faces.

As crypto matures and more trading activity moves on-chain, protocols like Hyperliquid that own the full stack will be positioned to capture significant market share. With its high-performance perpetual exchange, foray into spot markets, and attractive valuation, Hyperliquid is well-positioned to be a key player in this evolving landscape.

Hyperliquid's L1 platform, HyperEVM, is also attracting builders and apps, positioning it as an execution layer beyond a DEX. A 20% premium is added in some cases to reflect potential scarcity or user demand for HYPE as a utility token.

In conclusion, Hyperliquid's undervalued status, coupled with its robust offering and potential for growth, makes it an intriguing prospect for crypto investors. However, as with any investment, it's crucial to conduct thorough research and consider the associated risks.