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BTC 
HYPE Hyperliquid's high incentives raise sustainability questions
Hyperliquid, the fast-growing cryptocurrency derivatives exchange, allows external builders to create their own market for perpetual contracts in exchange for transaction fees of up to 50%. However, the policy is under scrutiny from key industry figures, including Infinex and Synthetix founder Kain Warwick, who questions whether such generous incentives can last.
Builder incentives and market dominance
Through its HIP-3 program, Hyperliquid allows anyone to pledge 500,000 HYPEs (worth approximately US$28 million) to deploy a permission-free perpetual contract market. Builders can earn up to half of transaction fees from these markets, many of which focus on tokenized real-world assets such as stocks and commodities. According to DefiLlama, the size of the market operated by builders has grown significantly, increasing from approximately 2% of Hyperliquid's total transaction volume at the beginning of 2026 to nearly 50% today.
Warwick said on the Unchained podcast on August 12 that based on his experience at Synthetix, such a high revenue share is unsustainable. He recalled that in the Synthetix project, external market makers tried to get a larger percentage of the cut, but never received more than 30%. He pointed out about Hyperliquid's model: "Hyperliquid finally set a 50% fee share, which is a bit crazy. I don't see how this can continue."
Kain Warwick pointed out that while market builders can migrate their platforms to other exchanges, Hyperliquid's dominance as a major trading venue gives it the ability to adjust incentives for builders at any time. He predicts that the current 50% share ratio is likely to be just an "initial offer that may change."
Financial data reveals why builder sharing has become a key issue for HYPE holders. Hyperliquid uses 99% of its share of fees (excluding the portion paid to builders) to a supplementary fund to repurchase HYPE tokens. As the share of the agreement itself shrinks, the repurchase scale also decreases, which directly affects the value dynamics of the token.
Fee sharing impact and revenue decline
Although transaction volumes remained stable, Hyperliquid's total revenue has declined for four consecutive quarters. Revenue in the third quarter of 2025 was approximately US$357 million, and dropped to approximately US$202 million in the second quarter of 2026, a drop of 43%. During the same period, the scale of quarterly token repurchases also declined, from nearly US$290 million to approximately US$149 million.
Warwick emphasized that although the overall transaction volume has remained stable, the allocation pattern of fees has changed significantly. "Fees just go to different people," he said, noting that funds are being reallocated from the parties to the builders.
Market concentration and systemic risk
Open interest in the HIP-3 market is increasingly concentrated, of which trade.xyz accounts for more than 90%. In July, open interest on tokenized real-world asset perpetual contracts on Hyperliquid reached a record $3.6 billion, even exceeding open interest on Bitcoin on the platform. This reliance on a single counterparty brings risks to both the builders and Hyperliquid itself.
Warwick highlights the vulnerability of relying on a single dominant builder: "You never want to rely entirely on one platform." He explained that Hyperliquid could reduce builder fees or directly take over these markets at any time, which could destabilize its largest partners.
Amid these dynamics, HYPE has recently traded at around US$57.66, down from a June high of US$76.67, while the agreement is still using daily fees for regular token destruction.
In a rapidly changing market environment, participants are increasingly adopting privacy-first tools to integrate transaction, information and portfolio tracking capabilities. These solutions provide real-time charts, price reminders, token-specific news and macro data without creating an account, helping traders reduce operational friction and stay ahead of volatile markets.
