Original author: Nick Sawinyh

Original translation: TechFlow

The decentralized finance (DeFi) ecosystem continues to evolve, with innovative protocols pushing the boundaries of on-chain transactions and financial services. Hyperliquid and Aster are two of the most notable new entrants. While both companies operate in the DeFi space, they have adopted distinct approaches to addressing key issues in decentralized trading and liquidity provision.

Hyperliquid: A performance-first DEX

Hyperliquid represents a new generation of decentralized exchanges, built from the ground up to rival the performance of centralized exchanges. Launching in 2023, it is a fully on-chain order book exchange, operating on its own L1 blockchain and specifically optimized for trading. The protocol has gained significant traction among professional traders and market makers, who previously considered the execution quality and speed of decentralized exchanges to be insufficient. Hyperliquid's architecture is designed for high-frequency trading, with sub-second block times and the ability to process over 100,000 orders per second. This is not just an automated market maker (AMM) with a different curve, but a completely new vision for decentralized trading infrastructure. The protocol supports both spot and perpetual contracts, with up to 50x leverage available on some trading pairs.

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Aster: Liquidity Aggregation Layer

While less well-known than Hyperliquid, Aster takes a distinctly different approach to DeFi infrastructure. Rather than competing directly with Hyperliquid, Aster positions itself as a liquidity aggregation and optimization protocol. The platform focuses on addressing cross-chain and cross-protocol fragmentation, providing users with optimal routing and execution across various liquidity sources. The protocol employs sophisticated algorithms to source liquidity from multiple DEXs, lending protocols, and other DeFi primitives, simplifying operations for end users. Aster's approach is particularly valuable in the current multi-chain landscape, where liquidity is increasingly fragmented across different ecosystems.

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Technical Architecture

Hyperliquid's dedicated L1 blockchain

Hyperliquid decided to build its own Layer 1 blockchain due to the limitations of existing infrastructure. The HyperBFT consensus mechanism, an improved version of Tendermint, enables the protocol to achieve consistent 0.2-second block times and instant finality. This performance is crucial for maintaining low spreads and enabling complex trading strategies previously only possible on centralized exchanges. The order book itself is maintained entirely on-chain, with every order, cancellation, and trade transparently recorded. This differs from many "hybrid" decentralized exchanges, which maintain order books off-chain but settle trades only on-chain. This fully on-chain approach ensures complete transparency and eliminates any centralized points of failure, although it requires significant engineering effort to achieve acceptable performance. The protocol utilizes an innovative margin system that allows cross-margining of all positions, improving capital efficiency for traders. The liquidation engine, run entirely on-chain via a network of guardian bots, ensures fair and transparent position liquidations without granting privileged access to any participant.

Aster's cross-chain infrastructure

Aster's technical architecture is centered around its proprietary routing engine and cross-chain messaging system. The protocol maintains indexers across multiple blockchains, monitoring liquidity, gas prices, and execution costs to determine the optimal trade path. This real-time data feeds into a sophisticated routing algorithm that splits trades across multiple platforms and blockchains, minimizing slippage and total execution costs. Cross-chain functionality relies on existing bridging infrastructure and Aster's own validation network. Rather than building new bridge services, Aster aggregates multiple bridge providers, selecting the most reliable and cost-effective solution for each transaction. This pragmatic approach reduces technical risk while maintaining flexibility as the bridging landscape evolves. Aster's smart contract architecture emphasizes modularity and upgradeability, with separate components handling routing, execution, and settlement. This enables the protocol to quickly adapt to new liquidity sources and optimize individual components without impacting the overall system.

Trading experience and performance

Hyperliquid CEX-like experience

Users transitioning from centralized exchanges to Hyperliquid often cite the platform's familiarity. The order book interface, with its real-time depth charts and order flow, is consistent with what traders expect from platforms like Binance or Bybit. Order execution is nearly instantaneous, with market orders typically fulfilled within the same block as submission. The implementation of perpetual swaps is particularly complex, with funding rates calculated hourly based on the premium or discount of the perpetual swap price relative to the index price. This mechanism keeps perpetual swap prices closely aligned with spot market prices while providing opportunities for funding rate arbitrage. The protocol supports advanced order types, including stop-loss, take-profit, and more complex conditional orders. Latency measurements show that for users with a good connection to validating nodes, Hyperliquid can process orders with an end-to-end latency of less than 250 milliseconds. While this doesn't compare to the microsecond latency of centralized exchanges, it's revolutionary for a fully decentralized system and more than enough to support most trading strategies.

Aster's Aggregation Advantage

Aster's user experience prioritizes simplicity and best execution over real-time trading. Users specify their desired trades, and the protocol handles all the complexities behind the scenes. For large trades that would incur significant slippage on any single platform, Aster can distribute execution across multiple DEXs or even different blockchains, often achieving better prices than any single platform could offer. The protocol excels at handling complex multi-hop trades, automatically routing through intermediary tokens when direct trading pairs are unavailable or illiquid. This is particularly important for long-tail assets with scarce and fragmented liquidity. Aster's algorithm considers not only price impact but also gas costs, bridge fees, and execution risk when determining routing. Performance metrics show that for trades over $100,000, Aster typically achieves a 2-5% execution price advantage over simple single-platform trades, and this advantage increases as trade size increases. However, this optimization comes at the cost of execution time: Hyperliquid can execute in seconds, while Aster trades involving cross-chain hops can take minutes to fully settle.

Token Economics and Value Accrual

Hyperliquid’s HYPE Token

The HYPE token serves multiple functions within the Hyperliquid ecosystem. As the native gas token of the Layer 1 blockchain, it is essential for all transactions. Furthermore, HYPE tokens can be staked to validators, allowing stakers to earn a portion of the protocol's transaction fees. This token economics creates a direct link between protocol usage and token value, as increased transaction volume drives gas demand and generates more transaction fees for stakers. The initial distribution of HYPE is primarily community-focused, with 40% allocated through various community projects, including trading competitions, liquidity provision incentives, and retroactive rewards for early adopters. Allocations to the team and investors are subject to long-term lockups, mitigating immediate selling pressure. The fee distribution mechanism is particularly attractive to token holders, with validators and stakers receiving 50% of all transaction fees. Given the protocol's growing transaction volume, this will generate significant real-world returns for participants. Currently, the annualized percentage yield (APY) for staking ranges from 15% to 25%, depending on the total amount staked and trading volume.

Aster's governance and fee model

Aster has adopted a more conservative approach to token economics, with the ASTR token initially primarily serving a governance function. Token holders can vote on protocol parameters, including which liquidity sources to integrate, the fee structure, and treasury management. The protocol captures value by charging a small fee on each trade on the platform, currently set at 0.05% of the transaction value. This fee model is designed to be sustainable and does not rely on token issuance to incentivize liquidity. Instead, Aster focuses on delivering real value through superior execution, believing that users are willing to pay a modest fee for better prices and convenience. This approach may limit growth in the short term, but it will create a more sustainable economic model in the long term. Treasury management is managed by governance, with fees accruing in various tokens based on trading activity. This diversified treasury provides a buffer against market volatility and funds continued development without the need for a token sale.

risk assessment

Hyperliquid Risk Factors

Despite Hyperliquid's exceptional performance, it faces numerous risks. While its custom L1 blockchain offers excellent performance, it poses verification risks if validator nodes are compromised or subject to censorship. Currently, the validator node count is relatively small and permissioned, but plans are underway to gradually decentralize it. Smart contract risks are mitigated through extensive audits and a bug bounty program, but the system's complexity, particularly the on-chain margin and liquidation engines, still presents a potential attack surface. While the protocol has not experienced any major incidents since launch, the risk of undiscovered vulnerabilities remains. Market risk is significant due to leveraged trading. While the liquidation system performs well during market fluctuations, extreme events could overload the insurance fund, leading to socialized losses. The protocol maintains transparency regarding the level of the insurance fund, but users remain aware of the risks of leveraged trading.

Aster Risk Considerations

Aster's primary risk stems from its reliance on external infrastructure. Bridging risk is particularly concerning, as the protocol relies on third-party bridges for cross-chain functionality. While aggregating multiple bridges provides redundancy, a catastrophic failure of a primary bridge could impact users currently transacting. Because Aster interacts with numerous external protocols, smart contract integration risk increases. Each integrated DEX or liquidity source presents a potential vulnerability. The protocol mitigates this risk through careful integration processes and monitoring, but its attack surface is inherently greater than that of a single-protocol system. If the routing algorithm fails to account for rapid market fluctuations or manipulative behavior, poor execution can result. While Aster has implemented various security measures, including maximum slippage protection and sanity checks, a sophisticated attacker could still find ways to exploit the routing logic.

Market position and competitive landscape

Hyperliquid's competitive position

Hyperliquid has rapidly become a leading decentralized exchange (DEX) for perpetual contracts, consistently ranking in the top five by trading volume. Its main competitors include dYdX, GMX, and Synthetix Perps, each employing a different decentralized derivatives trading strategy. Hyperliquid's strengths lie in its superior performance and user experience, attracting traders who prioritize execution quality. The protocol has been particularly successful in attracting market maker traffic, with several well-known trading firms providing liquidity. This creates a virtuous cycle: better liquidity attracts more traders, generating higher fees for market makers, further boosting liquidity. Currently, the depth and spreads of major trading pairs are approaching those of secondary centralized exchanges. As other protocols recognize the importance of performance, competition is intensifying. Several new DEXs based on Layer 1 and Layer 2 are launching, with performance targets similar to Hyperliquid's. Hyperliquid's first-mover advantage and established liquidity provide it with a competitive moat, but maintaining its technological edge is crucial for long-term success.

Aster's niche and growth potential

Aster occupies a different competitive landscape, competing more with aggregators like 1inch and Matcha than directly with DEXs. Aster's focus on cross-chain aggregation stands in stark contrast to competitors who typically focus on single-chain optimization. As multi-chain theory deepens and liquidity continues to fragment within the ecosystem, Aster's value proposition becomes increasingly important. The protocol has seen significant success with institutional users and DAOs executing large trades, as execution quality significantly impacts returns. The ability to access liquidity across multiple chains from a single interface, without having to directly manage the complexity of bridging, provides significant value to these users. As cross-chain activity increases, its growth potential becomes increasingly apparent. The protocol is well-positioned to benefit from the surge in L2 and L1 alternatives, which will create new liquidity pools that need efficient connectivity to the broader market. Aster's blockchain- and protocol-neutral approach enables it to quickly adapt to evolving market dynamics.

Recent Developments and Catalysts

Hyperliquid has accelerated its roadmap through several community-approved initiatives:

• HIP-1 and HIP-2 Stablecoin Proposals: In 2025, Hyperliquid launched its native stablecoin, USDH, using the HIP-1 standard and an ERC-20 version. Validators will issue USDH on a native market of their choice, starting with a capped minting/redemption phase followed by a full rollout. The reserve model combines off-chain assets like government bonds with on-chain reserves, generating revenue to support HYPE token buybacks and validator rewards.
• Circle/USDC Integration: Circle launched native USDC on the HyperEVM, supported by CCTP V 2 interoperability. This enhances USD liquidity on Hyperliquid and introduces an interesting dynamic between third-party USDC and Hyperliquid’s own USDH.
• HIP-3 Governance Extensions: The new proposal outlines a mechanism for permissionless market listings via auctions, potentially democratizing asset listings while aligning incentives through HYPE staking.

These moves signal Hyperliquid’s commitment to achieving protocol-native liquidity and deeper financial integration, setting it apart from competitors that rely solely on external stablecoins.

In contrast, Aster has yet to launch a native stablecoin. Instead, it relies on established assets like USDC and USDT for transaction routing. While this mitigates the regulatory and operational risks of stablecoin issuance, it also means that Aster cannot provide Hyperliquid with direct fees or a buyback mechanism like USDH.

Future Development and Roadmap

Hyperliquid's future

The Hyperliquid roadmap focuses on three key areas: decentralization, feature expansion, and ecosystem development. Gradually decentralizing the validator set is a top priority, with plans to transition to a permissionless validation mechanism once the network stabilizes. This process must be carefully managed to improve censorship resistance while maintaining performance. Feature expansion includes adding more trading pairs (particularly spot trading) and introducing more complex order types and trading strategies. The protocol is also exploring integration with other DeFi protocols, potentially allowing Hyperliquid positions to be used as collateral elsewhere or supporting the construction of structured products on exchanges. Ecosystem development includes building a developer community around Hyperliquid. The team is developing a comprehensive API and SDK to enable algorithmic trading and integration with trading bots and platforms. A grant program aims to incentivize the development of tools and applications that enhance the trading experience. Through a bounty program, the development of tools and applications to enhance the trading experience is incentivized.

Aster's strategic direction

Aster's development focus is on expanding blockchain coverage and improving routing intelligence. The protocol plans to integrate with emerging Layer 2 and application chains to maintain its position as the most comprehensive aggregation layer. Each integration requires careful design to ensure security and optimal routing, but it also expands the protocol's addressable market. Development of artificial intelligence and machine learning enhancements to the routing algorithm is ongoing, which is expected to improve execution quality by better predicting market impact and optimizing split strategies. The team is also exploring integration with private memory pools and order flow auctions to access additional sources of liquidity. Strategic partnerships with wallets and other DeFi interfaces could significantly expand Aster's user base. By providing aggregation infrastructure for other protocols and applications, Aster has the potential to become the default execution layer for a large number of DeFi transactions, without users even realizing they are using the protocol.

Aster vs. Hyperliquid comparison chart

in conclusion

Hyperliquid and Aster represent two successful yet distinct approaches to improving decentralized trading. Hyperliquid focuses on replicating and exceeding the performance of centralized exchanges on a fully decentralized platform to meet the needs of active traders and market makers who demand superior execution. Its success demonstrates that decentralized exchanges can compete with centralized exchanges on their own merits, not just based on the ideology of decentralization. Aster's aggregation approach addresses an equally important issue: the fragmentation of liquidity in an increasingly complex multi-chain environment. By abstracting complexity and optimizing cross-platform execution, Aster provides value even to users who may not care about the underlying infrastructure. This pragmatic approach to improving user outcomes, rather than building yet another decentralized exchange, demonstrates the maturity of the DeFi space. Both protocols face challenges. Hyperliquid must strike a delicate balance between performance and decentralization while fending off increasing competition. Aster must manage the complexity and risks of integrating with an ever-expanding number of blockchains and protocols while maintaining security and reliability.

The success of these two protocols will ultimately benefit the entire DeFi ecosystem. Hyperliquid demonstrates that decentralized infrastructure can rival centralized performance and has the potential to accelerate the migration of trading volume on-chain. Aster demonstrates that a multi-chain future doesn't necessarily mean market fragmentation and inefficiency—as ecosystem complexity grows, intelligent infrastructure can maintain or even improve capital efficiency. For users and investors evaluating these protocols, the choice isn't necessarily an either-or. Hyperliquid serves traders who require high-performance perpetual swaps and spot trading, offering a centralized exchange (CEX)-like experience. Aster serves users seeking best execution for large trades or access to fragmented cross-chain liquidity. Both protocols are pushing the boundaries of DeFi, striving to build a more efficient, accessible, and robust decentralized financial system. The continued development of these two protocols is worth watching, as they represent broader trends in DeFi: the pursuit of performance parity with traditional finance and the need for infrastructure capable of managing growing complexity. Their success or failure will provide important lessons for the next generation of DeFi protocols and shape the future landscape of the decentralized market.