HIP-2: Hyperliquidity

HIP-2 introduces a decentralized onchain liquidity mechanism for Hyperliquid spot markets. Its core principle: “liquidity should be democratized.”

What It Does

Hyperliquidity is a fully decentralized, automated market-making strategy that runs as part of Hyperliquid’s block transition logic. It provides guaranteed liquidity for any HIP-1 token without requiring a human operator.

Parameters

Parameter Description
spot The spot order book asset (USDC quote)
startPx Initial price of the range
nOrders Number of orders in the range
orderSz Full order size in the range
nSeededLevels Levels beginning as bids instead of asks

Deployers must fund additional USDC for each seeded level. Increasing nSeededLevels reduces total genesis supply.

Price Range

Prices follow a geometric progression:

px_0 = startPx
px_i = round(px_{i-1} × 1.003)

This creates levels spaced 0.3% apart.

Update Mechanism

  • Updates on every block with minimum 3-second intervals
  • After each update: targets full ask orders based on available balance, creates partial orders from remainders
  • Fully filled tranches are modified to orders on the side with available balance

Guarantees

  • 0.3% spread every 3 seconds with zero operator maintenance
  • Integrates with general-purpose order books — active LPs can participate alongside the automated strategy
  • No external infrastructure required

Limitations

Currently available only on spot pairs against USDC.