Despite the emergence of other trading platforms like Aster and Lighter with huge investments and even endorsements from prominent figures like CZ, Hyperliquid remains difficult to replace. It's a customized L1 that is considered the most market maker-friendly in the crypto world, bar none.
Hyperliquid's real innovation lies in the meticulous redesign of the order book's microstructure, incorporating the definition of the trading method directly into the consensus mechanism. This seemingly simple yet revolutionary design allows Hyperliquid to enforce the processing of cancel and post-only orders before GTC and IOC orders at the consensus level.
For market makers, the ability to withdraw quickly is crucial. In times of severe price volatility, cancellation requests are always executed before other consumption requests. Hyperliquid guarantees the priority of cancellation, protecting market makers from threats.
During the October 10th crash, market makers on Hyperliquid remained online, with spreads ranging from 0.01% to 0.05%. This is because market makers were confident in their ability to withdraw in time.
Other order book platforms and Automated Market Makers (AMMs) suffer from a critical problem. When market makers offer prices, and then prices change, they send cancellation requests. But before the cancellation takes effect, High-Frequency Traders (HFTs) arrive, exploiting these "old" prices.
As a result, market makers are forced to offer wider spreads to protect themselves, which means consumers pay an extra 0.1% per trade. This is what's called "toxic order flow." Trading volumes may appear large, but it's really just a game between high-frequency traders, damaging the overall liquidity quality of the market.
Hyperliquid defines "what is good trading" at the consensus level. Market makers can offer tight spreads with greater confidence, because they know their cancellation requests will be processed first. Traders can no longer take advantage of the speed advantage of a few thousandths of a second. That's why liquidity on Hyperliquid is better in times of volatility, and slippage is lower.
Hyperliquid protects those who are willing to provide liquidity, gives the best prices to consumers who are willing to trade, and makes robots seeking quick profits unprofitable.
Hyperliquid defines the type of trading that is worth consensus confirmation, raising the level of competition.
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