When Traders Start Trading Silver On-Chain: Hyperliquid's Full-Asset "Infiltration War"

Original Author: Kuli Bei, Deep Tide TechFlow

Over the past month, the crypto market's attention has been fixated on Bitcoin's back-and-forth tug-of-war, or simply on the massive bull run in gold and silver. Yet, amidst this boring sideways consolidation, one platform has been executing a quiet offensive: Hyperliquid.

Three Numbers to Explain What's Happening

Let's start with the data. On Monday, January 27th, Hyperliquid's HIP-3 open interest reached a new all-time high of $793 million. Just a month ago, that number was only $260 million.

What is HIP-3?

Simply put, it's the "permissionless perpetual contract deployment" feature launched by Hyperliquid last October. Anyone can launch a perpetual contract market on the platform by staking 500,000 HYPE tokens. It sounds technical, but the results are tangible: this feature has generated $25 billion in cumulative trading volume in less than 4 months since its launch.

The second data point is even more interesting.

Hyperliquid's CEO, Jeff Yan, recently shared a comparison chart: the bid-ask spread for BTC perpetual contracts on the platform is only $1, while Binance's spread is $5.5. In terms of order book depth, Hyperliquid has 140 BTC sitting at certain price levels, while Binance only has 80.

What does this mean? It means that in terms of liquidity, a decentralized exchange is starting to compete with the world's largest centralized exchange.

The third data point is the easiest to overlook but might be the most crucial: the 24-hour trading volume for Silver perpetual contracts on Hyperliquid reached $1.25 billion, making it the third most traded asset on the platform, behind only BTC and ETH. Gold perpetual contract volume also reached $131 million.

The hottest trading instruments on a crypto exchange are gradually being dominated by traditional precious metals.

How Did the Liquidity Build Up?

Hyperliquid's liquidity growth follows a classic "flywheel effect."

Initially, the platform used its HyperBFT consensus algorithm to achieve 0.2-second transaction confirmations and handle 200,000 orders per second. These performance metrics encouraged professional market makers to dip their toes in.

Once market makers discovered that "on-chain trading could also be this fast," they allocated more capital to provide liquidity. As liquidity deepened, retail and institutional traders, noticing the low slippage and trading experience close to Binance's, started moving their orders over.

As trading volume increased, market makers earned profits from fee sharing and continued to increase their investment. More capital came in, order books deepened, allowing for larger single-trade sizes, prompting hedge funds and quantitative teams to also start incorporating Hyperliquid into their trading channels.

Now, Hyperliquid accounts for about 70% of the open interest in the decentralized perpetual contracts market, several times that of the second-place contender. This gap is still widening.

The "Unexpected Surge" in Precious Metals Trading

The popularity of gold and silver perpetual contracts seems somewhat inexplicable. How did a crypto exchange become a hub for precious metals trading?

In 2025, gold rose by 67%, its largest annual gain in 45 years. Silver was even more explosive, surging 145%, and has risen another 53% this year, breaking its all-time high above $117 per ounce.

Global central banks are buying gold, ETFs are buying gold, and retail investors are buying gold. "Inflation trading" has become a consensus—everyone believes that with governments printing money at a breakneck pace, fiat currencies will depreciate, while hard assets will retain value.

But the problem is that traditional financial market gold futures have high barriers to entry, leverage restrictions, and require KYC. On Hyperliquid, you can trade gold perpetual contracts with 50-100x leverage, no identity verification needed, with absurdly high capital efficiency.

Consequently, a group of hedge funds and commodity traders who previously traded gold on COMEX (Chicago Mercantile Exchange) began experimenting with opening positions on Hyperliquid. They came for gold but quickly discovered, "so trading BTC and ETH on-chain is this convenient too."

This is the logic of user migration: using a familiar asset (gold) to lure traditional financial market traders on-chain, then letting them discover crypto asset trading opportunities themselves.

TradeXYZ, the largest market deployer on HIP-3, now accounts for 90% of HIP-3 trading volume. Its three largest markets are: XYZ100 (an index tracking the top 100 companies), Silver, and Nvidia stock perpetual contracts, with cumulative trading volumes reaching $12.7 billion, $3 billion, and $1.2 billion respectively.

This is no longer a "crypto-native" exchange; it's more like an "all-asset trading layer."

Valuation Logic and Risks

The HYPE token surged 50% within a week, returning to around $32. The underlying logic is straightforward: Hyperliquid allocates 97% of its protocol fee revenue to buy back and burn HYPE. The greater the trading volume, the higher the fees, and the stronger the buy pressure for HYPE.

When HIP-3's open interest grows from $260 million to $793 million, when silver perpetual contracts see daily trading volume exceeding $1.25 billion, these numbers translate into real fee revenue, ultimately becoming buy orders for HYPE.

But risks are also accumulating. Currently, HYPE's fully diluted valuation (FDV) exceeds $30 billion. This valuation has already fully priced in the expectation that "Hyperliquid becomes a top-three DEX."

Short-term risks include:

Regulatory raids. If the U.S. SEC or CFTC determines that Hyperliquid's precious metals perpetual contracts constitute "unregistered commodity futures," they could exert pressure. Although decentralized protocols are theoretically "impossible to shut down," regulatory pressure could scare away market makers and institutional capital.

Intensifying competition. Other exchanges are eyeing the commodity and U.S. stock market cake and could launch products with lower fees or higher performance at any time.

However, from a trader's perspective, as long as HIP-3's open interest continues to hit new highs, as long as BTC order book depth continues to approach Binance's, and as long as precious metals trading volume maintains growth—if these three indicators hold, HYPE remains in an upward trend.

The Underlying Logic: The "Efficiency Revolution" of Decentralization

The story of Hyperliquid is, at its core, an "efficiency revolution of decentralization."

In the past, the core selling point of decentralized exchanges was "security." When CEXs imploded, on-chain exchanges became safe havens. This was passive, defensive value.

Now, leading DEXs are beginning to demonstrate "active offensive" capabilities: using faster speeds, lower slippage, and a richer product suite to directly seize market share from CEXs.

Hyperliquid's daily trading volume is consistently 3-5 times that of dYdX, and for certain smaller altcoins, its trading depth even approaches that of Binance.

When the on-chain trading experience becomes infinitely close to that of centralized exchanges, when users no longer need to sacrifice efficiency for "decentralization," the entire market's power structure will be redefined.

The explosion of precious metals perpetual contracts is just the first step in this transformation. As more and more traditional assets gain sufficient liquidity on-chain, as more and more traditional traders discover that "decentralized exchanges can actually be this good to use," the next step will be the comprehensive on-chain migration of stocks, forex, and commodities.

What Hyperliquid is fighting is more like a quiet war of infiltration.

And the $793 million HIP-3 open interest is merely a milestone footnote in this infiltration campaign.