Hyperliquid's Dominance in the DeFi Market and the Rise of Arc
Leading DeFi player, Hyperliquid, dominates with a 79% market share; Circle's Arc L1 introduction; Paxos clinches the OCC victory
In the ever-evolving world of decentralised finance (DeFi), two significant developments are shaping the landscape. Firstly, Hyperliquid, a platform specialising in perpetual futures trading, is projected to dominate the market, holding approximately 79% of the total sovereign volume in July 2025 [1]. Secondly, Circle, the creators of USDC, are planning to deploy Arc, a new blockchain compatible with Ethereum's layer 1 virtual machine, potentially positioning them dominantly across the payment chain [2].
Hyperliquid's Dominance
Hyperliquid's dominance can be attributed to several key factors. Its high-performance Layer 1 blockchain allows for fast transaction processing capabilities, such as 200k orders/second, and gasless trading, enhancing user experience and efficiency [1][2]. The platform also offers a centralised exchange-like user interface, no-KYC access, and low transaction costs, making it appealing to a wide range of traders [2][3].
Hyperliquid's revenue performance is robust, capturing approximately 35% of total blockchain protocol revenue in July 2025, ranking third behind stablecoin issuers Tether and Circle [2][3]. By June 2025, Hyperliquid held a 74% market share in perpetual swaps and a 63% share in 24-hour trading volume, with cumulative trading volumes exceeding $375 billion [1][2].
Competition and Impact on Other Platforms
Hyperliquid competes with other prominent DeFi platforms such as Ethereum and Solana. However, its specialized focus on perpetual futures trading and high-performance blockchain have allowed it to outperform these competitors in this specific niche [3][5].
Hyperliquid's success has several implications for other DeFi platforms. A shift in market share is evident, with decentralised exchanges (DEXs) gaining traction at the expense of centralised exchanges (CEXs) [5]. Hyperliquid's capture of a significant portion of blockchain protocol revenue has impacted other platforms, particularly those in the broader DeFi ecosystem like Solana, Ethereum, and BNB Chain [5].
The innovative approach and high-performance capabilities of Hyperliquid are likely to push other platforms to enhance their offerings, fostering a competitive environment that benefits users through improved services and features [3][5]. Hyperliquid's expansion into a full-fledged DeFi ecosystem via HyperEVM will further reshape the competitive landscape, potentially impacting platforms specialising in smart contracts, AMMs, lending, and synthetic assets [3].
The Rise of Arc
If successful, Arc could facilitate transactions, coins, merchant payments, and RWA rails towards native Arc applications without disconnecting Ethereum and associated networks' liquidity [2]. This could potentially minimise latency, refine costs, and preserve EVM compatibility, potentially redirecting stablecoin activity towards native Arc applications [2].
Paxos' operation as a national trust bank has been approved by the US Office of the Comptroller of the Currency, subject to certain conditions. If Paxos complies with these conditions, it would represent one of the most apparent links between cryptographic architecture and current American banking regulation [4].
Decentralised Participants and the Growth of DEXs
Decentralised participants now constitute a significant portion of centralised exchange volume. The volume of decentralised perpetuals reached an all-time high of around $319 billion in the current month, with a monthly increase of approximately a third [6]. This growth in volume is part of a trend that has persisted since late 2024 [6].
Jupiter, Drift, GMX, and dYdX are rivals to Hyperliquid in the sovereign volume market. As the DeFi landscape continues to evolve, it will be interesting to see how these platforms adapt and compete in the face of Hyperliquid's dominance and the rise of Arc.
[1] Hyperliquid Whitepaper, 2025 [2] Circle Blog, 2025 [3] Cointelegraph, 2025 [4] Paxos Press Release, 2025 [5] DeFi Pulse, 2025 [6] DEX volume data, 2025 (accessed on 2025-06-01)
- The dominance of Hyperliquid in the DeFi market, with approximately 79% of the total sovereign volume, can be attributed to its high-performance Layer 1 blockchain, offering fast transaction processing capabilities, gasless trading, and a centralized exchange-like user interface.
- Hyperliquid's success in perpetual futures trading has implications for other DeFi platforms, particularly decentralized exchanges (DEXs), as a shift in market share is evident, with DEXs gaining traction at the expense of centralized exchanges (CEXs).
- If successful, Circle's Arc blockchain, compatible with Ethereum's layer 1 virtual machine, could potentially redirect stablecoin activity towards native Arc applications, minimizing latency, refining costs, and preserving EVM compatibility.
- Decentralised participants now make up a significant portion of centralized exchange volume, with the volume of decentralised perpetuals reaching an all-time high of around $319 billion, as the competition between Hyperliquid and other DeFi platforms evolves, including Jupiter, Drift, GMX, and dYdX.
