How to Understand Hyperliquid's Latest HIP-3 Upgrade in Layman's Terms?

Original Author: nairolf

Original Translation: Deep Tide TechFlow

What is HIP-3?

Here is @HyperliquidX's simple explanation of HIP-3.

HIP-3 allows developers to deploy a perpetual contract market on HyperCore.

To ensure market quality and protect users, deployers must stake 500,000 HYPE. In case of malicious market behavior, validators have the authority to slash the deployer's stake.

You should already be familiar with HyperCore, right? It includes the state of the order book and the matching engine.

In simple terms, it is the backend of Hyperliquid's exchange.

HIP stands for Hyper Improvement Proposal. Essentially, it outlines how changes are proposed for the protocol.

The primary goal of HIP-3 is to allow anyone to deploy a perpetual contract market.

Currently, the process of adding new tokens to a perpetual contract exchange is permissioned.

This means the core team decides which tokens to add based on demand, trading volume, and other criteria.

HIP-3 enables anyone to list their chosen tokens. Yes, quite literally any token.

However, there are some restrictions. Only one token can be listed every 31 hours. Additionally, you need to win the deployment rights through a Dutch Auction (using HYPE).

You must stake 500,000 HYPE and be responsible for setting up the market.

This involves selecting an oracle, defining leverage limits, handling settlement logic, and ensuring everything operates securely.

The 500,000 HYPE serves as a security guarantee and a way for the protocol to protect itself.

If your token market experiences strange manipulation, validators can vote to slash your HYPE.

In simple terms, this HYPE is to ensure that your token listed is legitimate.

As the deployer of the token, you can claim 50% of the total market fees. You can even set an additional custom fee.

In other words, you can earn a portion of the fees from users trading the token you listed.

HIP-3 allows anyone to list a token on the Hyperliquid perpetual contract exchange.

To ensure market security, a 500,000 HYPE stake is required, and in case of suspicious activity, this stake may be slashed.