Introduction

Decentralized perpetual trading had its breakout moment in 2025. dYdX, once the clear leader with 73% of the market in early 2024, slid to just 7% by year’s end. Hyperliquid surged in the opposite direction, seizing more than 60%.

Both platforms represent different approaches to decentralized derivatives trading, but they've chosen very different paths. Hyperliquid built a custom Layer-1 blockchain optimized specifically for trading, while dYdX migrated to its own Cosmos-based app-chain. Understanding these architectural choices and their real-world implications is crucial for traders, developers, and anyone interested in the future of decentralized finance.

Platform Architecture: Two Distinct Philosophies

Hyperliquid: The Custom L1 Approach

Hyperliquid runs on a custom Layer-1 blockchain designed specifically for trading. Its HyperBFT consensus delivers sub-second finality (median ~0.2s, 99th percentile <0.9s) and throughput around 100,000 TPS.

On top of this are two core pieces:

• HyperCore Engine: Rust-based execution layer handling order matching and settlement directly on-chain.

• HyperEVM: Added in 2025, bringing Ethereum compatibility without sacrificing performance.

To maximize speed, Hyperliquid started with a smaller validator set but is decentralizing through the HYPE token and community staking.

dYdX V4: The App-Chain Route

dYdX V4 takes the opposite path: it’s a Cosmos SDK chain using Tendermint (CometBFT) consensus, with ~1–2 second block finality and up to 60 validators.

Its architecture highlights include:

• Cosmos SDK: Off-the-shelf framework that lets dYdX focus on trading logic.

• IBC Integration: Seamless cross-chain transfers within the Cosmos ecosystem.

• Modular Design: Specialized modules, such as x/clob for order book management.

Trading Performance and User Experience

Speed and Execution

For active traders, speed is the biggest separator. Hyperliquid settles trades fully on-chain in under a second, while dYdX v4, now on Cosmos, introduced app-chain latency.

Hyperliquid

• Median execution: ~0.2s

• 99th percentile latency: <0.9s

• Throughput: 200,000+ orders/sec

• Finality: Sub-second

dYdX

• Block time: 1–2s

• Settlement: 1–2s

• Consensus: >67% validator approval

• Throughput: Bound by Cosmos consensus

Order Book Design

The platforms diverge in how they run their order books:

• Hyperliquid: Everything (orders, cancels, trades) lives directly on-chain. Matching happens within consensus, giving verifiable, deterministic execution.

• dYdX: Uses a hybrid system (x/clob) where orders sit in-memory until executed. Only completed trades are written on-chain, leaving some state off-chain.

Trading Features

Both platforms offer great trading tools, but with different priorities:

Leverage Limits:

• Hyperliquid: Up to 50x on major pairs, 40x on Bitcoin futures

• dYdX: Maximum 20x leverage across supported markets

Market Coverage:

• Hyperliquid: 130+ markets including rapid listings of new tokens

• dYdX: ~30-40 major markets with more conservative listing approach

Advanced Orders:

• Both platforms support stop-loss, take-profit, and conditional orders

• Hyperliquid offers more granular position management tools

• dYdX provides institutional-grade risk management features

Fee Structure and Economics

Trading Fees

Hyperliquid has the lowest fees just 0.01% maker and 0.035% taker. dYdX is more expensive. The fee structures reflect different business models:

Hyperliquid Fee Schedule:

• Maker fee: 0.01%

• Taker fee: 0.035%

• Volume discounts available

• HYPE staking provides up to 40% fee reduction

dYdX Fee Schedule:

• Maker fee: 0.01% (base level)

• Taker fee: 0.05% (base level)

• Significant volume-based reductions for high-frequency traders

• Potential negative maker fees through rebate programs

Gas Fees and Transaction Costs

This represents one of the most significant practical differences:

Hyperliquid: Implements a zero gas fee model for trading operations. Users pay no transaction fees for placing, modifying, or canceling orders. The platform absorbs these costs and generates revenue through trading fees.

dYdX: Requires minimal fees in DYDX tokens for transaction spam prevention, though these are typically negligible compared to trading fees.

Market Performance & Adoption

Volume and Liquidity Analysis

Hyperliquid has captured approximately 60% of the decentralized perpetual trading market as of 2025, processing over $1.5 trillion in cumulative trading volume since launch according to CoinGecko analytics. Daily volumes frequently exceed $2 billion.

Current Market Metrics (September 2025):

• Hyperliquid: $8-12B daily volume, ~$1.7B TVL

• dYdX: ~$1.5B daily volume, ~$420M TVL

The volume migration reflects not just technical superiority but also user preference for faster execution and lower costs.

User Base Growth

User growth has also been exceptional. Hyperliquid more than doubled its user base after the HYPE airdrop, onboarding over 170,000 new users practically overnight. The platform now serves over 400,000 users, while dYdX maintains approximately 150,000 active users.

Token Economics & Governance

HYPE Token Utility

The HYPE token serves multiple critical functions within the Hyperliquid ecosystem:

Core Utilities:

• Gas token for HyperEVM operations

• Governance participation through HIP proposals

• Validator staking for network security

• Trading fee discounts up to 40%

• Collateral for trading positions

Tokenomics Structure:

• Total supply: 1 billion tokens

• Genesis airdrop: 31% (no VC allocation)

• Future emissions: 38.8%

• Core contributors: 23.8% (locked with vesting)

DYDX Token Role

The DYDX token focuses primarily on governance and network security:

Primary Functions:

• Governance voting for protocol upgrades

• Validator staking and delegation

• Limited fee reduction benefits

The governance-centric model means DYDX value derives more from protocol adoption and governance participation rather than direct utility in trading operations.

Cross-Chain Architecture and Security

Hyperliquid's Validator-Managed Bridges

Hyperliquid takes a hands-on approach to cross-chain transfers. Instead of relying on an external protocol like IBC, Hyperliquid's validator nodes handle bridging.

Bridge Mechanism:

• Smart contract deployment on Arbitrum

• Validator observation of deposit events

• Hot validator set signs confirmations

• Two-phase withdrawal with time delays

• Emergency pause capabilities through Locker committee

Security Model: The bridge relies on honest majority assumptions among Hyperliquid validators and multisig governance for contract upgrades.

dYdX's IBC Integration

dYdX strategically limits cross-chain requirements by using a single base collateral (USDC) for all markets, avoiding the need to list many external assets.

Architecture Benefits:

• Leverages Cosmos IBC for trustless transfers

• Circle's CCTP integration for USDC bridging

• No custom bridge validation by dYdX validators

• Protocol-level security through light client proofs

Trust Model: Security depends on source chain validators and cryptographic proofs rather than governance keys or committee decisions.

Developer Ecosystem and Composability

Hyperliquid's Expanding Ecosystem

With the launch of HyperEVM, developers can now deploy smart contracts directly on Hyperliquid exchange, using existing Solidity code and accessing native trading features via HyperCore.

Developer Features:

• Direct access to live trading data

• Revenue sharing through builder codes

• Native integration with order book and settlements

• Over 170 projects deployed as of mid-2025

dYdX's Focused Approach

dYdX maintains a more conservative approach to ecosystem development:

Current State:

• Limited EVM compatibility

• Focus on core trading functionality

• Integration with broader Cosmos ecosystem

• Fewer third-party applications

Pros and Cons of Hyperliquid and dYdX

Hyperliquid Advantages

• Performance: Sub-second execution and zero gas fees create a seamless trading experience comparable to centralized exchanges.

• Transparency: Fully on-chain order book provides complete visibility into market depth and trading activity.

• Innovation: Custom L1 design enables features impossible on general-purpose blockchains.

• User Alignment: No VC allocation and revenue sharing create strong community incentives.

Hyperliquid Disadvantages

• Centralization Risk: Smaller initial validator set and Foundation control over bridges create trust dependencies.

• Technical Complexity: Custom chain requires specialized infrastructure and carries implementation risks.

• Bridge Security: Validator-managed bridges introduce additional trust assumptions for asset custody.

dYdX Advantages

• Decentralization: 60+ independent validators and established Cosmos ecosystem provide robust security.

• Proven Infrastructure: Leveraging Cosmos SDK and Tendermint reduces technical risks.

• Institutional Appeal: Regulatory compliance focus and traditional finance integration.

• Trustless Bridging: IBC integration eliminates custom bridge risks.

dYdX Disadvantages

• Performance Constraints: Cosmos consensus limits speed compared to purpose-built solutions.

• Limited Ecosystem: Fewer opportunities for developers and composable applications.

• Market Share Loss: Declining adoption suggests competitive disadvantages.

Conclusion

Hyperliquid and dYdX showcase two very different visions of decentralized trading. Hyperliquid’s custom Layer-1 prioritizes speed, low costs, and a fully on-chain experience. These features have helped it capture the bulk of active traders. Its execution speed rivals centralized exchanges, and its gas-free model makes trading frictionless.

dYdX, on the other hand, leans on the Cosmos ecosystem for decentralization and security. With its validator set, trustless bridging, and institutional-grade safeguards, it appeals to users who value resilience and proven infrastructure over raw speed.

About Arch

Arch is building a next-gen wealth management platform for individuals holding alternative assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto. We also offer access to bank-grade custody, trading and staking services.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrency investments are volatile and risky. Always conduct your own research before making investment decisions.