Hyperliquid Review 2025: The Best Perpetual DEX for Funding Rate Arbitrage?

Why Hyperliquid Matters for Funding Rate Traders

If you are serious about funding rate arbitrage, you need to understand Hyperliquid. This perpetual DEX has fundamentally changed the landscape of decentralized derivatives trading and become an essential platform for anyone pursuing crypto passive income through funding strategies.

With over 73% market share in decentralized perpetual trading, 3.5 billion USD in TVL, and liquidity that rivals major centralized exchanges, Hyperliquid is not just another DEX - it is the infrastructure backbone for on-chain derivatives.

In this comprehensive review, we analyze everything you need to know about Hyperliquid:

• What makes Hyperliquid unique
• Key metrics and performance data
• Trading fees and how they compare
• The HYPE token and staking benefits
• How to use Hyperliquid for funding rate arbitrage
• Pros, cons, and risks to consider
• Step-by-step guide to get started

Track Hyperliquid funding rates in real-time on the FundingView Dashboard.

What is Hyperliquid?

Hyperliquid is a decentralized perpetual futures exchange built on its own Layer 1 blockchain. Unlike most DeFi protocols that deploy on existing chains like Ethereum or Solana, Hyperliquid made the strategic decision to build custom infrastructure specifically optimized for high-frequency trading.

The Technical Architecture

Hyperliquid's infrastructure consists of two complementary layers:

HyperCore: The native execution layer managing all critical operations:

• Fully on-chain order book (CLOB - Central Limit Order Book)
• Trade execution with sub-second latency
• Risk and liquidity management
• Staking and validator operations

HyperEVM: An EVM-compatible execution layer launched in February 2025:

• Allows developers to deploy smart contracts
• Native access to HyperCore liquidity
• Composability with the Hyperliquid ecosystem

This dual-layer architecture enables something unprecedented in DeFi: the performance of a centralized exchange with the transparency and self-custody of decentralization.

Why This Matters for Arbitrage Traders

For funding rate arbitrage, Hyperliquid offers critical advantages:

1. Deep liquidity - Order book depth rivaling CEXs like Binance
2. Low latency - Near-instant order execution
3. Transparent funding rates - Visible on-chain, trackable via FundingView
4. Self-custody - No counterparty risk like collapsed CeFi platforms
5. Composability - Positions can integrate with DeFi protocols

Hyperliquid Key Metrics (2025)

Based on recent data, Hyperliquid demonstrates exceptional growth:

TVL and Inflows

Trading Volume and Open Interest

Hyperliquid vs Major CEXs

These metrics demonstrate that Hyperliquid has crossed a critical threshold - it now competes directly with major centralized exchanges, not just other DEXs.

Hyperliquid Trading Fees

Understanding fees is crucial for calculating your net arbitrage APR. Here is Hyperliquid's fee structure:

Standard Fee Tiers

Staking Tier Discounts

Since May 2025, HYPE stakers receive additional fee discounts:

Fee Comparison for Arbitrage

For funding rate arbitrage, let us compare Hyperliquid with other exchanges:

Pro tip: Pair Hyperliquid with Paradex for optimal arbitrage - use Paradex's zero fees to offset Hyperliquid's costs. Learn more in our arbitrage tutorial.

Funding Rates on Hyperliquid

Hyperliquid charges hourly funding rates, which is important for APR calculations.

Funding Rate Mechanics

• Frequency: Every hour (24 times per day)
• Calculation: Based on premium between perp and spot price
• Direction: Positive = longs pay shorts, Negative = shorts pay longs

Converting Hyperliquid Rates to APR

Use this formula to convert hourly rates to annual returns:

APR = Hourly Rate × 24 × 365 × 100

Example:

• Hyperliquid hourly funding: 0.005%
• APR = 0.005% × 24 × 365 = 43.8% APR

See our complete APR calculation guide for detailed examples.

Tracking Hyperliquid Funding Rates

Monitor Hyperliquid funding rates across all trading pairs on the FundingView Dashboard. Our platform displays:

• Real-time hourly rates
• Historical funding data via History Explorer
• Arbitrage spreads vs other exchanges
• Pre-calculated APR on the Strategy page

The HYPE Token

HYPE is Hyperliquid's native token, launched via one of the largest airdrops in crypto history on November 29, 2024.

HYPE Token Metrics

HYPE Utility

1. Fee Discounts: Staking HYPE reduces trading fees up to 40%
2. Governance: Future protocol governance participation
3. Staking Rewards: Earn yield by delegating to validators
4. Ecosystem Access: Required for certain HyperEVM protocols

HYPE Buyback Model

Unlike most DeFi protocols, Hyperliquid directs trading fees to the Assistance Fund, which continuously buys HYPE on the open market:

This creates consistent buy pressure on HYPE, funded by actual protocol revenue - not inflation or token emissions.

HYPE Performance vs Market

In H1 2025, HYPE significantly outperformed major crypto assets:

Hyperliquid for Funding Rate Arbitrage

Hyperliquid is ideal for funding rate arbitrage strategies due to its unique characteristics.

Why Use Hyperliquid for Arbitrage

Advantages:

1. Deepest DEX liquidity - Can execute large positions without slippage
2. Frequent funding - Hourly rates mean more frequent income
3. Transparent rates - All data on-chain and trackable
4. Self-custody - No exchange counterparty risk
5. HYPE rewards - Earn trading fee discounts via staking

Considerations:

1. Fees exist - Unlike zero-fee Paradex
2. Learning curve - Web3 wallet required
3. Gas costs - Minimal but exist for deposits/withdrawals

Optimal Arbitrage Pairs with Hyperliquid

Based on historical funding rate data, these exchange combinations work well:

Check current spreads on the FundingView Strategy page.

Example Arbitrage Setup

Scenario: ETH funding arbitrage between Hyperliquid and Paradex

Net hourly rate: 0.012% - 0.004% = 0.008%

APR calculation:

Net APR = 0.008% × 24 × 365 = 70.08%

Fee adjustment:

• Hyperliquid fees: 0.035% × 2 = 0.07%
• Paradex fees: 0%
• Break-even: 0.07% ÷ 0.008% = 8.75 hours

After ~9 hours, you are in pure profit earning ~70% APR.

Learn the complete process in our step-by-step tutorial.

Key Features for Traders

1. On-Chain Order Book (CLOB)

Hyperliquid is the first DEX with a fully on-chain Central Limit Order Book. This means:

• Limit orders, stop-losses, and take-profits work like CEXs
• No AMM slippage or impermanent loss
• Professional trading experience

2. Cross-Margin and Isolated Margin

Choose your preferred margin mode:

• Cross-margin: All positions share collateral
• Isolated margin: Each position has dedicated collateral

For delta-neutral arbitrage, isolated margin is often preferred to prevent liquidation cascades.

3. 150+ Trading Pairs

Hyperliquid supports perpetuals for:

• Major assets (BTC, ETH, SOL)
• DeFi tokens (AAVE, UNI, LINK)
• Memecoins (DOGE, PEPE, WIF)
• New listings (often first to market)

4. Spot Trading via Unit

Since February 2025, Hyperliquid offers spot trading through Unit:

• Native deposits for BTC, ETH, SOL, and more
• No wrapping or bridging required
• Direct deposit addresses like CEXs

This enables spot-perp arbitrage strategies on a single platform.

5. HLP (Hyperliquidity Provider)

The HLP is a community vault providing market-making liquidity:

Users can deposit USDC to earn yield from market-making activities.

HyperEVM Ecosystem

Launched in February 2025, HyperEVM has grown rapidly:

HyperEVM Metrics

Key Protocols on HyperEVM

These protocols enhance Hyperliquid's utility for DeFi strategies beyond simple trading.

Risks and Considerations

No platform is without risks. Here are important considerations:

1. Smart Contract Risk

While Hyperliquid has not suffered major exploits, the March 2025 JELLY incident exposed vulnerabilities in the liquidation system. The team responded quickly, but it demonstrated that risks exist.

2. Centralization Concerns

Hyperliquid launched with only 4 validators, raising decentralization concerns. As of 2025, this has expanded to 27 validators (25 active), but remains more centralized than Ethereum or Bitcoin.

3. Regulatory Uncertainty

As a decentralized exchange without KYC, Hyperliquid operates in a regulatory gray zone. This could change depending on future legislation.

4. HYPE Token Volatility

While HYPE has performed well, it remains a volatile crypto asset. Staking for fee discounts means exposure to price fluctuations.

5. Liquidation Risk

Like all leveraged trading, positions can be liquidated. Always use proper risk management and avoid excessive leverage.

How to Get Started with Hyperliquid

Step 1: Prepare Your Wallet

You need a Web3 wallet compatible with Arbitrum:

• MetaMask
• Rabby Wallet
• Coinbase Wallet

Step 2: Get USDC on Arbitrum

Hyperliquid uses Arbitrum for deposits. You need USDC on Arbitrum:

1. Bridge from Ethereum via Arbitrum Bridge
2. Buy directly on Arbitrum via DEXs
3. Withdraw from CEX directly to Arbitrum

Step 3: Connect and Deposit

1. Visit Hyperliquid (use our referral for benefits)
2. Connect your wallet
3. Deposit USDC from Arbitrum
4. Funds appear in your Hyperliquid account

Step 4: Start Trading

1. Navigate to the trading interface
2. Select your trading pair (e.g., BTC-PERP)
3. Choose margin mode (cross or isolated)
4. Set leverage (we recommend 2-5x for arbitrage)
5. Execute your trade

Step 5: Monitor Funding Rates

Track your positions and funding income:

• Use FundingView Dashboard for real-time rates
• Check History Explorer for patterns
• Monitor the Strategy page for opportunities

Hyperliquid vs Competitors

Hyperliquid vs Paradex

Verdict: Use both - Hyperliquid for liquidity, Paradex for zero fees.

Hyperliquid vs dYdX

Verdict: Hyperliquid has more liquidity and market momentum.

Hyperliquid vs CEXs

Verdict: Hyperliquid for self-custody, CEXs for maximum liquidity.

Frequently Asked Questions

Is Hyperliquid safe to use?

Hyperliquid is a self-custody platform, meaning you control your funds. The main risks are smart contract vulnerabilities (rare but possible) and trading losses. It is generally considered safer than CeFi platforms due to no counterparty risk. See our risk guide.

What is the minimum deposit on Hyperliquid?

There is no strict minimum, but we recommend at least 500-1,000 USD for effective funding rate arbitrage to offset fees.

How do I withdraw from Hyperliquid?

Withdrawals go to your connected Arbitrum wallet. The process is simple:

1. Go to Portfolio
2. Click Withdraw
3. Specify amount
4. Confirm in your wallet

Does Hyperliquid have an airdrop?

The main HYPE airdrop occurred in November 2024. However, there is speculation about future airdrops for HyperEVM users. Using the platform and ecosystem protocols may qualify for future distributions.

What is the best leverage for funding arbitrage on Hyperliquid?

We recommend 2-5x leverage for funding rate arbitrage. Higher leverage increases liquidation risk without proportionally increasing funding income.

How does Hyperliquid funding compare to other exchanges?

Hyperliquid uses hourly funding, making rates directly comparable to Paradex, Extended, and other hourly exchanges. For 8-hourly exchanges like Binance, convert using our APR calculator formulas.

Conclusion: Is Hyperliquid Worth Using?

Yes, Hyperliquid is essential for serious funding rate arbitrage traders.

Here is why:

Strengths:

• Deepest on-chain liquidity in DeFi
• Self-custody eliminates counterparty risk
• Hourly funding rates for frequent income
• HYPE token provides fee discounts and upside
• Rapidly growing ecosystem on HyperEVM

Weaknesses:

• Fees exist (pair with zero-fee exchanges)
• Requires Web3 knowledge
• Some centralization concerns remain

For funding rate arbitrage, we recommend using Hyperliquid as your primary liquidity venue, paired with Paradex for zero-fee execution. This combination optimizes for both liquidity and profitability.

Get started: Open Hyperliquid Account

Track rates: FundingView Dashboard

Related Articles

Exchange Reviews

• Paradex Review 2025 - Zero Fee Trading
• Perpetual DEX Offers and Bonuses

Funding Rate Education

• What Are Funding Rates? Complete Guide
• How to Calculate Funding Rate APR
• Crypto Funding Rate Glossary

Strategy Guides

• Earn Your First $100 with Funding Arbitrage
• Best Crypto Passive Income Strategies 2025
• Spot and Perp Arbitrage Strategy
• Durable Strategies for XP and Airdrops

Risk Management

• Is Funding Arbitrage Safe?

Tools

• FundingView Dashboard - Real-time funding rates
• Strategy Page - Ranked opportunities
• History Explorer - Historical analysis
• What is FundingView?