First and foremost, I must admit that overlooking Hyperliquid might be the biggest mistake I’ve made this year.

This is a project I’ve known about for quite a while. At the time, my thought was: Hyperliquid requires users to trade actively to earn airdrop points, which I found unappealing. So, I neither participated nor recommended it to others. Furthermore, I believed that surpassing a veteran like dYdX would be tough for Hyperliquid, even with faster trading speeds. I assumed it was just another decentralized exchange.

However, I overlooked an important detail: this project’s grassroots nature—no venture capital, entirely community-driven. Ultimately, it was this grassroots characteristic that allowed the project’s airdrop performance to far exceed most people’s expectations. After the airdrop, the price of HYPE surged, peaking at $28.85. But it’s not too late to make amends; the Hyperliquid airdrop is still ongoing, so participating now isn’t too late.

That said, while Hyperliquid basks in the spotlight, danger looms. Reports suggest that North Korean hackers are targeting this rising star. Security researcher Taylor Monahan revealed that wallets associated with North Korea’s Lazarus Group have been highly active on Hyperliquid, seemingly probing for vulnerabilities.

The hackers may exploit Hyperliquid’s centralized validator nodes and potential single points of failure to launch attacks. While Hyperliquid Labs has attempted to calm users, market sentiment has already been affected, with HYPE’s price plummeting 21% in a short span.

1. Core Highlight: Speed, at the Cost of Centralization

Hyperliquid’s key selling point is its trading speed. Its dedicated Layer 1 blockchain enables transaction execution speeds faster than centralized exchanges (CEX), allowing for near-instant trades. However, this obsession with speed comes at the expense of decentralization.

1.1 Validator Nodes: Hyperliquid vs. dYdX

• Hyperliquid: Operates with only four validator nodes, primarily controlled by the team. Not only are these nodes few in number, but they also appear to be linked to team members’ personal devices. In the event of an attack or human error, the entire network could collapse.

• dYdX: Has 60 active validator nodes, which are more distributed and significantly more decentralized.

1.2 Cross-Chain Bridge Security

• Hyperliquid: Relies on centralized multi-signature and oracle-based solutions, creating clear single points of failure. If the cross-chain bridge is attacked, user assets could face irrecoverable losses.

• dYdX: Uses Cosmos’ IBC protocol, adopting a fully distributed bridging solution that is more secure and reliable.

While these centralization issues haven’t caused direct losses so far, if not addressed, they could become Hyperliquid’s biggest long-term hurdle.

2. Potential Risks and Improvement Directions

Despite Hyperliquid’s impressive performance, its centralization issues could prove fatal. If validator node control remains concentrated in the hands of a few, it provides an opening for hackers. Its current cross-chain bridge solution also lacks robust defenses against attacks. If security is compromised, it would erode user trust, reduce liquidity, and lead to a vicious cycle.

To achieve sustainable development, Hyperliquid needs to:

1. Gradually increase the number of validator nodes to reduce centralization risks.

2. Improve cross-chain bridge security by introducing distributed bridging solutions.

3. Empower the community with greater decision-making authority to enhance user trust in the platform.

3. How to Earn Hyperliquid Airdrops Without Active Trading? (Beginner’s Guide)

If you, like me, dislike earning airdrops through trading, I recommend using HLP to participate.

HLP (Hyperliquidity Provider) is Hyperliquid’s liquidity pool token, designed for market-making and liquidity support. Users can deposit funds (e.g., USDC) into the HLP liquidity pool. These funds are used to provide liquidity for the platform, generating returns for users.

HLP’s earnings come from two main sources:

1. Market Making: HLP participates in Hyperliquid’s market-making activities, earning income by providing liquidity to traders. This revenue comes from arbitrage opportunities during market fluctuations and other trading activities involving the liquidity pool.

2. Profits from Liquidations: Since Hyperliquid is a perpetual contract exchange, liquidation mechanisms may trigger forced closures during market volatility. As a liquidity provider, HLP can earn a share of profits from these liquidation activities. This income doesn’t stem from trading fees but from additional profits generated by the platform’s liquidation mechanism.

HLP’s returns are not derived from simple staking or locking but from liquidity provision and market-making. This decentralized liquidity provision approach allows community members to share in the platform’s overall revenue and operational success.

Participation is simple and involves two steps: bridging funds and making a deposit. Of course, you’ll need stablecoins on the Arbitrum chain, such as USDC, USDT, or USDC.e.

Step 1: Bridge Funds

Click the link to access the following page.

3721 is my referral code. By using it, you’ll enjoy a 4% fee discount on every trade, while the platform rewards me with 10% of the transaction fees—a win-win sharing model.

Then, click the Deposit button in the upper-right corner, as shown below.

In the pop-up window, select the token and amount you want to deposit from Arbitrum. I deposited 502.8 USDC, as shown below.

In under 10 seconds, your deposit will be completed.

Step 2: Deposit into the HLP Vault

Follow the arrows in the image below to locate the HLP Vault.

After opening it, as shown, first establish a connection.

Then, in the new window, enter the amount you want to deposit into the HLP Vault and click Deposit to complete the process.

After depositing into the HLP Vault, you can not only earn a 37% annual return but also gain airdrop points.

Conclusion

The dYdX MegaVault introduced last week, along with the earlier JLP project, are excellent liquidity mining opportunities worth exploring. If you’re new to perpetual contracts, check out this beginner’s guide, which also includes detailed information on the JLP project.

Hyperliquid is a project that cannot be ignored, but its brilliance is not without concerns. For short-term traders, Hyperliquid’s speed and high funding rates offer significant arbitrage opportunities. However, if you plan to hold long-term or participate deeply, it’s essential to closely monitor its decentralization progress and security improvements. After all, only by achieving true decentralization can Hyperliquid gain long-term market trust and maintain its competitive edge.

For airdrop updates, follow the new official WeChat account (the old one got banned):

Zero-Cost Airdrop Recommendations:

• Grass (Token Released): https://t.co/PnwBigWSMM

• Silencio (Distribution Completed): https://t.co/4WxV3EAWGk

Beginner's Guide Recommendations:

• Buy 0.001 BTC: https://t.co/UeaC0pQm5m

• Store Bitcoin in a Cold Wallet: https://t.co/sbT1E9AB14

• Sell 300 USDT: https://t.co/ICb4wHMWq1

• Perpetual Contracts: https://t.co/67J5atbVeo

Airdrop-Friendly DeFi Services:

• ARP1: Liquidity Mining + Re-staking: https://t.co/XJs0w3edXN

• ARP2: Extreme Rebalancing: https://t.co/9E8Q9XWLQh

About Airdrop Reference

Airdrop Reference is an innovative blockchain education and promotion platform aimed at spreading basic blockchain knowledge and helping ordinary users understand and participate in the development of blockchain technology. The mission of this project is to lower the entry barriers to blockchain, promote high-quality blockchain projects, and allow more people to enjoy the benefits of the Web3.0 era.

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