Hyperliquid at a Crossroads: Follow Robinhood or Continue the Nasdaq Economic Paradigm?

Original author: shaunda devens

Original translation: Saoirse, Foresight News

Hyperliquid's perpetual contract liquidation volume has reached Nasdaq-levels, but its economic benefits have not matched this scale. In the past 30 days, the platform's notional value of liquidated perpetual contracts reached $205.6 billions (annualized to $617 billions on a quarterly basis), but fee revenue was only $80.3 million, with a fee rate of about 3.9 basis points.

Its profit model is similar to a "wholesale trading venue."

In comparison, Coinbase reported a trading volume of $295 billions in Q3 2025, with trading revenue of $1.046 billions, implying a fee rate of 35.5 basis points. Robinhood, in its crypto business, demonstrates a similar "retail profit model": $80 billions in notional crypto trading volume generated $268 million in crypto trading revenue, with an implied fee rate of 33.5 basis points; meanwhile, the platform's notional stock trading volume in Q3 2025 was $647 billions.

The gap between the two is not only reflected in fee rates—retail platforms have more diversified profit channels. In Q3 2025, Robinhood's trading-related revenue was $730 million, in addition to $456 million in net interest income and $88 million in other income (mainly from Gold subscription services). In contrast, Hyperliquid is still highly dependent on trading fees, and at the protocol level, its fee rate structurally remains at single-digit basis points.

This difference essentially stems from "different positioning": Coinbase and Robinhood are "broker/distributor-type enterprises," profiting through their balance sheets and subscription services; Hyperliquid is closer to the "exchange level." In traditional market structures, the profit pool is distributed at these two levels.

The Divide Between Broker-Dealers and Exchange Models

The core difference in traditional finance (TradFi) lies in the separation of the "distribution end" and the "market end." Retail platforms like Robinhood and Coinbase are at the "distribution layer," occupying high-margin areas; exchanges like Nasdaq are at the "market layer"—at this level, pricing power is structurally limited, and competition in trade execution gradually moves toward a "commoditized economic model" (i.e., profit margins are greatly compressed).

1. Broker-Dealers = Distribution + Client Balance Sheet

Broker-dealers control client relationships. Most users do not directly interface with Nasdaq, but enter the market through brokers: brokers handle account opening, asset custody, margin/risk management, client support, and tax document processing, then route orders to specific trading venues. This "ownership of client relationships" brings profit opportunities beyond trading:

• Fund balance related: cash sweep interest spreads, margin lending interest, securities lending income;
• Service packaging: subscription services, bundled products, bank card/consulting services;
• Order routing economics: brokers control trading flow and can embed payment sharing or revenue sharing mechanisms in the routing chain.

This is the core reason why broker profits can surpass those of trading venues: the profit pool is concentrated at the "distribution end" and "fund balance end."

2. Exchange = Order Matching + Rule System + Infrastructure, Fee Rates Are Capped

Exchanges operate trading venues, with core functions including order matching, setting market rules, ensuring deterministic execution, and providing trading connectivity. Their sources of profit include:

• Trading fees (in highly liquid products, fees are continuously compressed by competition);
• Rebates/liquidity incentive programs (to attract liquidity, most public fees are often returned to market makers);
• Market data services, trading connectivity/server hosting services;
• Listing services and index licensing fees.

Robinhood's order routing model clearly reflects this structure: the broker (Robinhood Securities) controls users and routes orders to third-party market centers, with routing profits shared along the chain. The "distribution layer" is the high-margin segment—it controls user acquisition and develops diversified profit channels around trade execution (such as payment for order flow, margin business, securities lending, subscription services).

Nasdaq, on the other hand, belongs to the "low-margin layer": its core product is "commoditized trade execution" and "order queue access," with pricing power structurally constrained in three ways—to attract liquidity, it must rebate fees to market makers; regulators cap access fees; and order routing is highly flexible (users can easily switch to other platforms).

Nasdaq's disclosed data shows that its stock business's "implied net cash yield" is only about $0.001 per share (i.e., one-thousandth of a dollar per share).

The strategic impact of low margins is also reflected in Nasdaq's revenue structure: in 2024, "market services" revenue was $1.02 billions, accounting for only 22% of total revenue of $4.649 billions; this proportion was 39.4% in 2014 and 35% in 2019—this trend shows that Nasdaq is gradually shifting from "relying on market trading execution business" to "more sustainable software/data business."

Hyperliquid Positioned at the "Market Layer"

Hyperliquid's actual fee rate of 4 basis points aligns with its strategic choice to position itself at the "market layer." The platform is building an "on-chain Nasdaq": through high-throughput order matching, margin calculation, and clearing technology stack (HyperCore), adopting a "market maker/taker" pricing model and providing rebates to market makers—its core optimization focuses are "trade execution quality" and "liquidity sharing," rather than "retail user profitability."

This positioning is reflected in two "TradFi-like" separation designs, which most crypto trading platforms have not adopted:

1. Permissionless Broker/Distribution Layer (Builder Codes)

"Builder Codes" allow third-party interfaces to access the core trading venue and set their own fee standards. The third-party fee cap for perpetual contracts is 0.1% (10 basis points), and for spot it is 1%, with fees adjustable per order—this design creates a "distribution competition market" rather than a "single APP monopoly."

2. Permissionless Listing/Product Layer (HIP-3)

In traditional finance, exchanges control listing rights and product creation rights; HIP-3 "externalizes" this function: developers can deploy perpetual contracts based on the HyperCore tech stack and API, and independently define and operate trading markets. Economically, HIP-3 formally establishes a "profit-sharing mechanism between trading venues and product providers"—deployers of spot and HIP-3 perpetual contracts can receive 50% of the trading fees for the assets they deploy.

"Builder Codes" have already proven effective at the distribution end: as of mid-December, about one-third of users were trading via third-party frontends rather than the official interface.

But this architecture also brings predictable pressure on the trading venue's fee income:

1. Pricing compression: multiple frontends share the same backend liquidity, and competition forces the "total cost" down to the minimum; with fees adjustable per order, pricing is further pushed toward the floor;
2. Loss of profit channels: frontends control user onboarding, service packaging, subscriptions, and trading processes, occupying the high-margin "broker layer," while Hyperliquid retains only the low-margin "trading venue layer" income;
3. Strategic routing risk: if frontends develop into "cross-platform order routers," Hyperliquid will be forced into "wholesale execution competition"—having to lower fees or increase rebates to retain trading flow.

Through HIP-3 and Builder Codes, Hyperliquid has proactively chosen a "low-margin market layer" positioning, while allowing a "high-margin broker layer" to form above it. If frontends continue to expand, they will gradually control "user-side pricing," "user retention channels," and "routing discourse power," which in the long run will create structural pressure on Hyperliquid's fee rates.

Defending Distribution Rights, Expanding Non-Exchange Profit Pools

The core risk Hyperliquid faces is the "commoditization trap": if third-party frontends can continuously attract users at prices lower than the official interface and eventually achieve "cross-platform routing," the platform will be forced to shift to a "wholesale execution economic model" (i.e., profit margins will continue to shrink).

From recent design adjustments, Hyperliquid is trying to avoid this outcome while broadening its revenue sources beyond trading fees.

1. Distribution Defense: Maintaining the Economic Competitiveness of the Official Interface

Previously, Hyperliquid proposed "staking HYPE tokens for up to 40% trading fee discount"—this design would have structurally enabled third-party frontends to offer "lower prices than the official interface." After canceling this proposal, external distribution channels lost the direct subsidy for "pricing below the official interface." Meanwhile, HIP-3 markets were initially only accessible via "developer distribution," not displayed on the official frontend; now, these markets have been included in the official frontend's "strict list." This series of actions sends a clear signal: Hyperliquid still retains permissionless features at the "developer layer," but is unwilling to compromise on "core distribution rights."

2. Stablecoin USDH: Shifting from "Trading Profits" to "Liquidity Pool Profits"

The core purpose of launching USDH is to reclaim the "stablecoin reserve yield" that previously flowed out. According to the public mechanism, reserve yields are split 50% to Hyperliquid and 50% for USDH ecosystem development. In addition, the design of "USDH trading markets enjoying fee discounts" further reinforces this logic: Hyperliquid is willing to accept "compressed per-trade profits" in exchange for "larger-scale, more stable liquidity pool profits"—essentially adding an "annuity-like revenue stream," whose growth can rely on the "monetary base" (rather than just trading volume).

3. Portfolio Margin: Introducing "Institutional Broker-Style Financing Economics"

The "portfolio margin" mechanism unifies margin calculation for spot and perpetual contracts, allows risk exposure hedging, and introduces a "native lending loop." Hyperliquid will charge "10% of borrower interest"—this design gradually links the protocol's economic model to "leverage utilization" and "interest rates," making it more similar to the profit logic of "brokers/institutional brokers" rather than a pure exchange model.

The Path for Hyperliquid to Move Toward a Broker-Dealer Economic Model

Hyperliquid's trading throughput has reached "mainstream trading venue levels," but its profit model remains at the "market layer": huge notional trading volume, but actual fee rates are only single-digit basis points. The gap with Coinbase and Robinhood is structural: retail platforms are at the "broker layer," controlling user relationships and fund balances, achieving high margins through diversified profit pools like "financing, idle funds, subscriptions"; pure trading venues focus on "trade execution as the core product," but due to liquidity competition and routing flexibility, "trade execution" inevitably becomes commoditized, and profit margins are continuously compressed—Nasdaq is the classic example of this constraint in traditional finance.

In its early stages, Hyperliquid deeply fit the "trading venue prototype": by separating "distribution (Builder Codes)" and "product creation (HIP-3)," it rapidly promoted ecosystem expansion and market coverage. But the cost of this architecture is "economic benefit spillover": if third-party frontends control "comprehensive pricing" and "cross-platform routing rights," Hyperliquid will face the risk of "becoming a wholesale channel, clearing trading flow at low margins."

However, recent actions show that the platform is consciously shifting toward "defending distribution rights" and "broadening revenue structure" (no longer relying solely on trading fees). For example, it no longer subsidizes "external frontend low-price competition," has included HIP-3 markets in the official frontend, and added "balance sheet-style profit pools." The launch of USDH is a typical case of bringing "reserve yield" into the ecosystem (including a 50% split and fee discounts); portfolio margin introduces "financing economics" by charging "10% of borrower interest."

Currently, Hyperliquid is gradually moving toward a "hybrid model": based on the "trade execution channel," it overlays "distribution defense" and "liquidity pool-driven profit pools." This transformation both reduces the risk of "falling into the wholesale low-margin trap" and, without giving up the "core advantages of unified execution and clearing," moves closer to a "broker-style revenue structure."

Looking ahead to 2026, the core issue facing Hyperliquid is: how to move toward a "broker-style economy" without breaking the "outsourcing-friendly model"? USDH is the most direct test case—its current supply is about $100 million, which shows that if the platform does not control "distribution rights," the expansion speed of "outsourced issuance" will be very slow. A more obvious alternative should be the "default setting on the official interface," such as automatically converting about $4 billions in USDC base funds into native stablecoins (similar to how Binance automatically converted USDC to BUSD).

If Hyperliquid wants to obtain a "broker-level profit pool," it must take "broker-style actions": strengthen control, deepen integration of proprietary products and the official interface, and clarify boundaries with ecosystem teams (to avoid internal friction over "distribution rights" and "fund balances").