Podcast Summary: Bankless – “Hyperliquid’s Rise: Revenue, Valuation & Risks”

Host: Ryan Sean Adams
Guest: Michael Nadeau, The DeFi Report
Date: September 10, 2025

Episode Overview

This episode is a deep dive into Hyperliquid (“Hype” token), the decentralized perpetuals (perps) trading platform and its rapid emergence as a force in the crypto ecosystem. Ryan Sean Adams and guest Michael Nadeau analyze Hyperliquid's revenue engine, unique token launch, the risk landscape, its product and ecosystem, and how to value Hype as an investment. The discussion tackles whether it’s too late to buy, explores the decentralized/centralized spectrum of Hyperliquid as a Layer 1, and compares its growth potential to exchanges like Binance and L1s like Ethereum and Solana.

Key Discussion Points and Insights

1. The Bull Case and Revenue Momentum

• Hyperliquid’s Explosive Revenue:

  • Hyperliquid is generating about $3.5 million in daily fees ([02:46]), and this has “doubled or tripled” since the start of the year.

    “Printing money, I think, is the story here. …the protocol just continues to print cash.” — Michael Nadeau [02:15]

  • In the last six months, Hyperliquid produced $409 million in fees, surpassing Ethereum at $332M and Solana at $233M ([03:16]–[04:51]).
  • Its user base is 40,000–60,000 active daily users, a concentrated set of heavy traders.

    “It’s coming from a very… small subset of users that are very active on Hyperliquid.” — Michael Nadeau [04:51]

  • Average revenue per user: $1,600 per month ([05:45]).

• Market Context:

  • Hyperliquid’s market cap is 1.2% of total crypto’s, but it’s generating 36% of all crypto revenues ([03:16]).

2. The Token Inception Story

• Fair Launch & No VCs:
  • 31% of tokens airdropped to early users during its November 2024 token genesis — $1.2 billion in value created for the community ([07:55]).
  • No VC or angel allocations — focus is purely on users and builders, building “loyalty and trust.”

    “I think they’ve done a really good job of this. …This has created so much loyalty. Then you have a really loud community…” — Michael Nadeau [09:53]

  • Team unlocks: ~24% of tokens vesting, starting November 2025, but the team has communicated they’ll limit how much they can liquidate ([10:25]).

3. Product and User Experience

• Centralized Exchange (CEX)-Like UX, On-Chain:
  • Offers self-custody and high performance; feels like trading on Binance or FTX, but is on-chain ([13:21]).
  • Hyperliquid focuses on perps trading — huge leverage, broad asset coverage, and fast listings.
  • Innovative integration partnerships with wallets and trading terminals (e.g., Axiom on Solana), referral-based user acquisition ([15:14]).

4. Hyperliquid Ecosystem and EVM Layer 1 Move

• “App Chain” to EVM L1:

  • Pivoted from a perps-focused app chain to launching the HyperEVM, a general-purpose EVM-compatible L1 ([19:39]–[21:47]).
  • Now attracting blue-chip DeFi protocols (e.g., Pendle, Morpho) and encouraging open, permissionless deployment.
  • Unique among L1s in beginning with a highly successful product, then growing outward, rather than the “empty L1” model.

    “…should Hyperliquid be… valued more relative to a large L1? …not really that they're competing with DYDX… maybe they’re actually trying to build out something much, much bigger here.” — Michael Nadeau [22:04]

• Liquidity Flywheel:

  • Rooted in deep perps liquidity and committed user base; now evangelists support rapid bootstrap of new DeFi primitives and apps.

5. Decentralization, Risks, and Property Rights

• Validator Set and Decentralization:

  • Operates with ~24 validators today ([25:39]).
  • Validators are permissioned — network is not yet open or fully decentralized; more akin to BNB Chain ([25:39]).
  • Not yet open source code; some risk if validators collude or are compromised, though incentives to “turn evil” are low.

• Bridge and Custody Risks:

  • Users must bridge from Ethereum L2s (primarily Arbitrum). Bridging introduces risks familiar from previous cycles ([bridge hacks discussed at 25:39]).
  • For now, less suited to “slow DeFi” use cases — “store of value/lending/borrowing” with months- or years-long holds ([28:16]).

    “You should use centralized exchanges like a public bathroom… Get in, do your business and then get out.” — Ryan Sean Adams [28:16]

  • However, on-chain transparency means less risk of asset rehypothecation compared to FTX/CEX collapse risk.

• AML/KYC Regulation:

  • Validators are KYC’d but users generally aren’t. Platform geofences, but is accessible via VPN ([34:49]).
  • Regulatory “black swan” is a risk, but current U.S. regime under Trump may be less aggressive.

6. Competitive Position & Scaling

• Second only to Binance in perps trading volume; has essentially “won” the decentralized perps exchange space ([35:40]).
• 10x the volume of all decentralized counterparts combined; comparable in open interest to Binance, Bybit, OKX, CME ([35:40]).

  “If you're generating that much value off of your users… they're not trading anywhere else, they're just trading… on Hyperliquid.” — Michael Nadeau [37:04]

7. Token Economics: Buybacks and Value Accrual

• Buyback Program:

  • ~95% of fees used to buy HYPE tokens on the open market; tokens are held in the treasury, not burned ([38:15]–[39:21]).
  • Mirrored to a share buyback — raises tokenholder’s share of circulating supply.

    “Not only do they not have the VCs dumping… they're actually out there putting a bid and a floor on the token as well…” — Michael Nadeau [39:21]

  • No fixed buyback mandate; could change if team needs cash for R&D or operations.

• Yield and Valuation:

  • Annualized buyback yield estimated at 4.3% ([41:04]).
  • Metrics: Fundamental analysis suggests a price-to-sales ratio of around 15–22 ([48:17]–[51:29]), compared to Coinbase’s 10, but with much higher revenue per employee and growth rate.
  • Debate about the best way to calculate supply for valuation purposes — proposal to use “outstanding supply” (subtracting foundation/treasury holdings) aligns with equities world ([43:37]–[45:24]).

8. Growth, Profitability and the Bull Case

• Efficiency and Scale:

  • Hyperliquid leads the entire digital economy in revenue per employee: $102 million per employee (Tether next at $93M; OnlyFans at $37M) ([52:36]).
  • Highlighted as proof of how “internet-native scaling” puts even Big Tech (Apple, Nvidia) to shame.

• Is It a Buy?

  • Nadeau views the current price as “fair,” with fundamentals supporting it — but suggests most upside may come in “bear market” cycles or if new ecosystem growth surpasses expectations ([48:17], [57:01]).
  • Hyperliquid will be a permanent part of his portfolio coverage (joining BTC, ETH, SOL), signaling conviction ([55:52]).
  • Patient scaling-in and waiting for bear market opportunities is his personal approach.

Notable Quotes & Memorable Moments

• On Token Distribution:

  “They dropped 31% of the token allocation to their early users… at a $3 hype price… about $1.2 billion of wealth creation… bought a lot of loyalty, I would say, right off the bat.”
  — Michael Nadeau [07:55]

• On Decentralization and Trust:

  “They started… less than a year ago and they’ve got about 24 validators today… more like a permissioned blockchain at this point… But because of the early stage… you do have… not a ton of validators, which diminishes the decentralization of the project and the security of the project.”
  — Michael Nadeau [25:39]

• On Exchange-Like Experience:

  “They solved this… sex like experience with high throughput. …You have self custody of the assets… that helps to build trust.”
  — Michael Nadeau [15:14]

• On the Buyback Model:

  “They’re using about 95% of it to go out and buy the hype token on the open market… those are not burned tokens… but… they are just out there, that's a constant bid in the market.”
  — Michael Nadeau [38:15]

• On Revenue/Employee:

  “Hyperliquid has passed Nvidia, Apple… Hyperliquid revenue, $102 million per employee. Nothing else is close… this is not growing like a fast growing fintech. This is growing like an on chain product market fit scale to the world type of company.”
  — Ryan Sean Adams [52:36]

Timestamps for Key Segments

• Revenue discussion starts: [02:15]
• Token launch/fair distribution: [07:55]
• Team, vision and background: [18:10]
• EVM ecosystem and Layer 1 pivot: [19:39], [21:47]
• Decentralization/property rights analysis: [25:39]–[31:05]
• Product market fit and onboarding: [13:21], [15:14]
• Buyback mechanics, tokenomics: [38:15]–[43:37]
• Valuation models and market cap discussion: [48:17]–[51:29]
• Revenue per employee comparison, business model: [52:36]
• Investor approach & personal strategy: [55:31]–[57:46]

Takeaway Summary

Hyperliquid, via its HYPE token, has rapidly carved out a foundational position as the top on-chain perps platform, rivaling even top centralized exchanges by volume and revenue, driven by a model that aligns user and investor interests through its fair launch and aggressive buybacks. Its move to a broader L1 EVM ecosystem is attracting further growth potential, but property rights and decentralization remain evolving risks. Fundamentally, its fair valuation and market dominance make it compelling, especially if ecosystem growth accelerates or in crypto’s next downturn.

Bankless and Michael Nadeau emphasize none of this is financial advice—crypto is risky and volatile.