Either HYPE is still cheap or most L1s are overvalued
Hyperliquid’s fundamentals continue to improve, yet its valuation remains discounted compared to other L1s
Akif CUBUK/Shutterstock modified by Blockworks
This is a segment from the 0xResearch newsletter. To read full editions, subscribe.
Hyperliquid’s spot volumes have seen a significant rise, particularly when compared to CEXs. Over the weekend, an unknown entity deposited and sold ~22.1k BTC to rotate into ~555k ETH, valued at over $2.4 billion. This surge in spot volumes positioned Hyperliquid as the second-highest exchange by BTC spot trading volume on Aug. 24, with a 12% market share, behind only Binance (38%). This is a substantial increase from Hyperliquid’s 30-day average daily market share of ~1%.
Stepping back, we can compare Hyperliquid’s monthly spot trading volumes against various CEXs (including all assets, not just BTC). We observe a consistent rise in Hyperliquid’s share of spot volumes year to date. This month, Hyperliquid accounted for 38% of Kraken’s spot volumes, 16% of Coinbase, 15% of OKX, 14% of Bybit, and 2.4% of Binance. Although all figures represent a significant rise from the beginning of the year, they also show that Hyperliquid still has a long way to go to flip some of the largest CEXs.
Regarding perpetual futures volumes, Hyperliquid has been growing significantly faster than its centralized counterparts. The chart below shows that the ratio between Hyperliquid’s perp volumes and that of the three largest CEXs has increased by more than 6x over the past year. Hyperliquid’s monthly perps volumes now represent almost 14% of Binance’s futures volumes, up from just 2.2% a year ago.
Growth in volumes is impressive. But what about revenue, especially as it compares to other chains? Hyperliquid (HyperCore + HyperEVM) has registered about $28 million in weekly revenue for two consecutive weeks, and $98 million in the past 30 days. These figures translate to an annualized revenue run rate of $1.2-$1.4 billion. Below, we see that Hyperliquid has been the top chain by weekly revenue in the last two weeks, achieving a new all-time high market share of 36%.
The chart below shows that HYPE is the cheapest asset among the leading chains on a price-to-sales basis, with its P/S of 12 representing a 90% discount to the cohort. Even on an FDV/sales basis, HYPE is also the cheapest L1. While we can do mental gymnastics all day long about whether L1s merit a premium or not, or if they should be valued based on revenue or not, the fact remains that HYPE today looks more attractively priced than all other L1s, based purely on this metric.
Ask yourself, what happens if the so-called “L1 premiums” wear off? What happens when buying pressure from DATCOs subsides? Is it the case that HYPE is undervalued, or simply that other L1s have incredibly elevated valuations that are becoming increasingly harder to justify? We can’t know for sure, but these are certainly questions worth thinking about.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
