Hyperliquid airdrop farming drives 84% token surge — here’s three other factors driving the price

Hyperliquid’s native token, Hype, is living up to its name.

In the past month alone, Hype has surged 84%, outperforming both DeFi tokens and major cryptocurrencies like Bitcoin, Ethereum, and Solana.

It peaked at just under $40 this week, reaching a market value just short of $13 billion, and currently trades as the world’s 15th most valuable cryptocurrency.

Some market observers say the token surge is more than just vibes.

“Speculation is always a layer in crypto price action, but Hype’s move isn’t purely artificial,” Mike Cahill, CEO of Douro Labs, a Pyth Network contributor, told DL News.

Even in a bullish quarter for cryptocurrencies, few tokens have matched Hype’s performance.

Here are four forces juicing up the Hype.

Airdrop farming and looping

Hyperliquid launched its token with an airdrop in November that distributed $1.6 billion worth of tokens to users. There’s speculation that another airdrop is on the horizon.

Users are also farming points, yields, and various rewards on several protocols on HyperEVM, a network of Hyperliquid-compatible DeFi protocols.

That’s “definitely juicing volumes,” Doug Colkitt, founder of DeFie exchange Ambient Finance, told DL News.

These reward farming activities require users to buy, stake, and “loop” Hype tokens, which adds to the demand.

Illia Otychenko, lead analyst at CEX.IO, a crypto exchange, told DL News that airdrop farming on Hyperliquid is driving Hype’s token price surge.

“A higher Hype price leads to bigger airdrop rewards, incentivising more people to farm, which fuels a higher Hype price,” Otychenko said.

Token buybacks

Hyperliquid touts a so-called community-first approach. The project rejected venture capital funding and allocated 70% of its token supply to its users.

It distributes transactions between liquidity providers and a special fund used to buy back and burn Hype tokens.

Token burns permanently remove cryptocurrencies from circulation by transferring them to an irretrievable address. The process can be used to manage inflation and amplify the value of the token.

Buybacks matter, says Colkitt.

“They are one of the few things in tokenomics that align incentives without relying on hype,” Colkitt told DL News. “When fees fund buy pressure, you’re tying price action to real usage, which is rare in DeFi.”

Otychenko called the buy-and-burn mechanism the “largest catalyst” that’s driving the Hype rally.

“Hype doesn’t need organic demand from users; purchases of Hype are automatically triggered whenever someone pays trading fees to the platform,” Otychenko said.

The Assistance Fund, Hyperliquid’s dedicated reserve for the buy-and-burn programme, has removed about $795 million worth of Hype tokens from the total supply.

“This buyback programme reduces the token supply and may influence market dynamics by alleviating potential sell pressure,” James Joseph, senior research analyst at CoinDesk Data, told DL News.

Market domination

Launched in 2013, Hyperliquid has quickly ascended to the summit of the onchain derivatives market.

“Hyperliquid has carved out a niche as one of the most performant onchain perpetuals platforms, and the Hype rally reflects growing investor awareness of that,” Cahill said.

At more than $11 billion, it holds the biggest market value in the sector, far surpassing its nearest rivals like dYdX and Arkham. It accounts for 70% of the onchain derivatives volume, DeFiLlama data shows.

Over the past month, the stablecoin market volume on Hyperliquid has surged 62% as more traders pile into the exchange.

Colkitt called Hype’s token surge a combination of “product edge and meme momentum.”

“Hyperliquid has done a good job building performant infrastructure, and traders are rewarding that,” Colkitt said. “It’s not vapourware, there’s through-put and growth underneath.”

Hyperliquid’s dominance of onchain derivatives is so great that analysts are now comparing its numbers to centralised exchanges like Binance and decentralised exchanges like Uniswap and PancakeSwap.

Hyperliquid’s monthly trading volume has exceeded Uniswap and PancakeSwap combined, and this month, it reached 10% of Binance’s derivatives trading volume.

Speculative rotation

It’s a rare thing to see DeFi experiments retain their users, especially after airdropping tokens. Hyperliquid is bucking that trend — for now.

And investors are paying attention.

Big buyers, or whales, are rotating into Hype amid the emerging shift towards DeFi projects with sticky users and cash flows.

As Bitcoin continues to court most of the attention from Wall Street, risk-seekers are turning to DeFi to sniff out more volatile bets.

Colkitt told DL News that the crypto market is in a “clear rotation cycle.”

“Traders are hunting for the next Solana or the next dYdX,” Colkitt said. “Hyperliquid checks a lot of those boxes: low latency, good user experience, and real adoption.”

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Contact him at osato@dlnews.com.