Against the backdrop of a general market pullback, Hyperliquid's native token HYPE has become the biggest highlight, rising 8% to $34.67 on December 22, with a market cap exceeding $10 billion, making it one of the most successful DeFi projects within weeks of its launch. Hyperliquid is a decentralized perpetual contract trading platform that uses an on-chain order book model, which differs from the AMM mechanism of traditional DEXs. Its core advantage is that the trading experience is close to that of centralized exchanges while maintaining asset self-custody, addressing the trust issues of CeFi and the poor user experience of DeFi. Success factor analysis: The surge of HYPE is due to multiple factors. Firstly, the product-market fit is high; perpetual contracts are the most active area in crypto trading, with daily trading volumes in the hundreds of billions. Hyperliquid attracts a large number of professional traders with low fees, high leverage, and zero slippage. Secondly, the token economics is reasonably designed, with a relatively small initial supply. As platform revenue grows, the buyback and burn mechanism drives the price up. Technical innovation is also key: Hyperliquid L1 adopts PoS consensus, specifically optimized for high-frequency trading, achieving TPS in the range of 100,000, with latency below 100 milliseconds. This performance is unique in the DeFi space and does not rely on underlying chains like Ethereum, avoiding the risk of gas fee fluctuations. In comparison to traditional DEXs, such as Uniswap and SushiSwap, which mainly serve spot trading, the perpetual contract market is larger. If Hyperliquid can capture 10% market share, the corresponding daily trading volume will reach hundreds of billions, resulting in astonishing platform fee income, which provides strong fundamental support for the HYPE token. Currently, the daily trading volume on the Hyperliquid platform is about $5-10 billion, still a gap away from the hundreds of billions of leading CEXs, but the growth rate is astonishing. Since its launch in November, the trading volume has increased by more than 10 times. If this trend continues, it may challenge the market position of giants like Binance and ByBit in the coming months. Regulation and risk: As a DeFi protocol providing leveraged trading, Hyperliquid faces regulatory uncertainty. The U.S. SEC has launched investigations into multiple DeFi projects. If Hyperliquid is deemed an unregistered securities exchange, it may face heavy fines or closure, which is the biggest risk of investing in HYPE. Another risk is technical security; the on-chain order book model has extremely high requirements for smart contracts. Any loophole could lead to loss of funds. Although the project has undergone multiple audits, hacker attacks have been frequent in DeFi history, and investors need to remain vigilant.