Overview

Welcome to the core of Hyperliquid’s technology stack! Here, we’ll provide both a high-level overview and a deeper technical dive into the blockchain, its consensus mechanism, and the native components that make Hyperliquid a high-performance and innovative ecosystem.

High-Level Diagram

Below is a conceptual diagram sourced from the Hyperliquid Foundation. This visual will help you understand how the pieces fit together:

Core Components

HyperBFT Consensus:

• A consensus algorithm that ensures network nodes agree on the current state of the blockchain.

• Currently, decentralization is limited, with all four known nodes operated by the Hyperliquid team. Over time, this must evolve to align better with Web3’s decentralization ethos.

• The codebase for the Hyperliquid L1 has not yet been publicly released, and details may evolve as the ecosystem matures.

Hyperliquid L1 - Native Components:

A custom, from-scratch Layer 1 blockchain designed to power Hyperliquid’s flagship application—its decentralized exchange (DEX). It aims to achieve up to 200,000 TPS and latency under 1 second, far surpassing traditional blockchain performance metrics.

Divided into Five Primary “Blocks”:

1. Native Order Book:

   • Fully On-Chain: All orders, trades, funding rates, and liquidations are recorded transparently on-chain.

   • Gas-Free Orders & Leverage: Place orders without gas fees and access up to 50x leverage on perpetuals.

   • Seamless UX: One-click trading without repeated wallet approvals for a streamlined experience.

2. Clearinghouse

   • Core Exchange State Management: The Clearinghouse manages all user states for both perpetual and spot trading.

   • Perpetuals: Handles cross-margin balances and positions, with optional isolated margin support to allocate specific collateral to individual positions, reducing risk exposure.

   • Spot Trading: Similarly manages token balances and holds for spot trading, ensuring accurate and efficient account states across the platform.

3. Oracles:

   • Accurate Market Data: Integrated price feeds ensure reliable and fair pricing for both spot and perpetual markets.

   • High-Frequency Updates: Updated rapidly to match the speed and precision of Hyperliquid’s platform.

4. Vaults:

   • Liquidity & Protection: Mechanisms like HLP (Hyperliquid Liquidity Provider) tokens and an AF (Assistance Fund) safeguard against volatility and liquidation risks.

   • Fee Redistribution: Trading fees are redistributed to liquidity providers, creating strong incentives for market participation.

5. Spot Tokens (HIP-1 & HIP-2)

   • Easy Token Launches (HIP-1): Deploy native spot tokens with a built-in on-chain order book for transparent, secure trading from day one.

   • Integrated Liquidity (HIP-2): Achieve “Hyperliquidity” with a mechanism inspired by Uniswap, tailored for order-book trading, ensuring dynamic and reliable liquidity for smoother price discovery.

HyperEVM:

• The HyperEVM layer enables users to build and deploy their own applications, launch tokens, and access all of these financial primitives in one unified environment.

• High performance, native financial components, and EVM compatibility make it possible to build apps that require all three: performance, liquidity, and programmability in one place.