Exchange or Brokerage? Hyperliquid's Business Model Choice

Original title: Hyperliquid at the Crossroads: Robinhood or Nasdaq Economics

Original author: @shaundadevens

Compiled by: Peggy, BlockBeats

Editor's Note: As Hyperliquid's trading volume approaches that of traditional exchanges, the real focus is no longer just on "how much volume," but rather on where it chooses to position itself within the market structure. This article uses the traditional financial division of labor between "brokerages and exchanges" as a reference to analyze why Hyperliquid proactively adopts a low-fee market positioning, and how Builder Codes and HIP-3, while expanding the ecosystem, exert long-term pressure on platform commission rates.

Hyperliquid's path reflects a core issue facing the entire crypto trading infrastructure: how should profits be distributed after scaling up?

The following is the original text:

Hyperliquid is handling perpetual contract trading volumes approaching those of Nasdaq, but its profit structure also exhibits "Nasdaq-level" characteristics.

Over the past 30 days, Hyperliquid cleared $205.6 billion in notional perpetual contract volume (approximately $617 billion annualized quarterly), but generated only $80.3 million in fee revenue, equivalent to a fee rate of approximately 3.9 basis points (bps).

This means that Hyperliquid's monetization model is closer to that of a wholesale execution venue than a high-fee trading platform geared towards retail investors.

In contrast, Coinbase recorded $295 billion in transaction volume in the third quarter of 2025, but achieved $1.046 billion in transaction revenue, implying a commission rate of approximately 35.5 basis points.

Robinhood's monetization logic in its crypto business is similar: its $80 billion in notional crypto asset trading volume generated $268 million in trading revenue, with an implied fee rate of approximately 33.5 basis points; meanwhile, Robinhood's notional stock trading volume reached a staggering $647 billion in the third quarter of 2025.

Overall, Hyperliquid has become one of the top trading infrastructures in terms of trading volume, but in terms of fees and business model, it is more like a low-commission execution layer for professional traders than a retail-oriented platform.

The difference lies not only in fee levels but also in the breadth of monetization channels. Retail platforms are often able to profit from multiple revenue streams simultaneously. In the third quarter of 2025, Robinhood generated $730 million in transaction-related revenue, along with $456 million in net interest income and $88 million in other revenue (primarily from its Gold subscription service).

In contrast, Hyperliquid currently relies much more heavily on transaction fees, which are structurally compressed into single-digit basis points at the protocol level. This means that Hyperliquid's revenue model is more concentrated and singular, and closer to a low-fee, high-turnover infrastructure role than a retail platform that deeply monetizes through multiple product lines.

This can essentially be explained by differences in positioning: Coinbase and Robinhood are brokerage/distribution businesses, relying on their balance sheets and subscription systems for multi-layered monetization; while Hyperliquid is closer to the exchange layer. In the traditional financial market structure, the profit pool is naturally split between these two layers.

Broker-Dealer vs. Exchange Model

In traditional finance (TradFi), the most fundamental distinction lies in the separation between the distribution layer and the market layer.

Retail platforms like Robinhood and Coinbase, located at the distribution layer, are able to capture high-margin monetization opportunities; while exchanges like Nasdaq, located at the market layer, have structurally limited pricing power, and their execution services are pressured by competition to adopt an economic model closer to commoditization.

Brokerage firm/brokerage firm = Distribution capabilities + Client balance sheet

Brokerages manage client relationships. Most users don't access Nasdaq directly, but rather through a brokerage firm. The brokerage firm handles account opening, custody, margin and risk management, client support, tax documentation, and then routes orders to specific trading venues.

It is this "relational ownership" that allows brokerages to monetize their assets in multiple ways beyond trading:

• Funds and Assets Balance: Cash Collection Interest Spread, Margin Lending, Securities Lending
• Product packages: subscription services, feature packages, bank card/investment advisory products
• Routing economics: Brokerages control the order flow and can embed payment or revenue-sharing mechanisms into the routing chain.

This is why brokerages often earn more than trading venues: the real profit pool is concentrated in the "distribution + balance" area.

An exchange consists of matching, rules, and infrastructure; its commission rates are limited.

Exchanges operate the trading venue itself: the matching engine, market rules, deterministic execution, and infrastructure connectivity. Their main monetization methods include:

• Transaction fees (which have been consistently suppressed in highly liquid products)
• Rebates/Liquidity Incentives (often, in order to compete for liquidity, a large portion of the nominal fee rate is returned to the market maker)
• Market data, network connectivity, and data center are all located at the same address.
• Listing fees and index authorization

Robinhood's order routing mechanism clearly illustrates this structure: user relationships are held by a brokerage firm (Robinhood Securities), and orders are then routed to a third-party marketplace, with economic benefits distributed along the chain during the routing process.

The real high-margin layer is on the distribution side, which controls customer acquisition, user relationships, and all monetization aspects surrounding execution (such as order flow fees, margin, securities lending, and subscription services).

Nasdaq itself operates on a thin-margin level. The product it offers is essentially highly commoditized execution capabilities and queue access, while its pricing power is strictly limited by mechanisms.

The reasons are as follows: in order to compete for liquidity, trading venues often need to return a large amount of nominal transaction fees in the form of maker rebates; regulators have set caps on access fees, limiting the amount of fees that can be charged; at the same time, order routing is highly flexible, and funds and orders can be quickly switched between different trading venues, making it difficult for any single venue to raise prices.

This is clearly illustrated in the financial data disclosed by Nasdaq: the net profit it actually captures from cash-on-stock transactions is typically only a few thousandths of a dollar per share. This is a direct reflection of the structural compression of profit margins in market-level exchanges.

The strategic consequences of this low profit margin are also clearly reflected in the changes in Nasdaq's revenue structure.

In 2024, Nasdaq's Market Services revenue was $1.02 billion, accounting for 22% of its total revenue of $4.649 billion; this proportion was as high as 39.4% in 2014 and was still 35% in 2019.

This continued downward trend aligns perfectly with Nasdaq's proactive shift from execution-oriented businesses that are highly dependent on market volatility and have limited profit margins to more recurring and predictable software and data businesses. In other words, it is the structurally low profit margins at the exchange level that are driving Nasdaq to gradually shift its growth focus from "matching and execution" to "technology, data, and service-based products."

Hyperliquid as the "market layer"

Hyperliquid's effective commission rate of approximately 4 basis points (bps) is highly consistent with its intentionally chosen market layer positioning. It is building an on-chain "Nasdaq-style" trading infrastructure.

The HyperCore-based high-throughput matching, margin, and clearing system employs a maker/taker pricing and market-making rebate mechanism, aiming to maximize execution quality and shared liquidity, rather than providing multi-tiered monetization for retail users.

In other words, Hyperliquid's design focus is not on subscription, balance, or reseller revenue, but on providing commoditized yet extremely efficient execution and settlement capabilities—a typical characteristic of the market layer and an inevitable result of its low-fee structure.

This is reflected in two structural divisions that most crypto trading platforms have not yet truly implemented, but which are very typical in traditional finance (TradFi):

The first is the license-free brokerage/distribution layer (Builder Codes).

Builder Codes allow third-party trading interfaces to be built on top of core trading venues and to collect their own revenue. Builder fees are capped: up to 0.1% (10 basis points) for perpetual contracts and up to 1% for spot trading, and fees can be set at the individual order level.

This mechanism creates a competitive market at the distribution layer, rather than allowing a single official application to monopolize user access and monetization rights.

The second is the license-free market/product tier (HIP-3).

In traditional finance, exchanges typically control listing approvals and product creation. HIP-3 externalizes this function: developers can deploy perpetual contracts that inherit the HyperCore matching engine and API capabilities, while the definition and operation of the specific market are the responsibility of the deployer.

In terms of economic structure, HIP-3 clarifies the revenue sharing relationship between the trading venue and the product layer: deployers of spot and HIP-3 perpetual contracts can retain up to 50% of the transaction fees of the assets they deploy.

Builder Codes has already shown its effectiveness on the distribution side: as of mid-December, about one-third of users were completing transactions through third-party front-ends instead of the native interface.

The problem is that this structure, which facilitates distribution expansion, also puts continuous pressure on the commission rates charged by the transaction venue layer:

1. Pricing has been compressed.

When multiple front-ends sell the same underlying liquidity simultaneously, competition will naturally converge toward the lowest overall transaction cost; and the Builder fee can be flexibly adjusted at the order level, further pushing the price to the lower limit.

2. Loss of monetization opportunities.

The front end controls account opening, product packaging, subscription services, and the complete trading workflow, thereby capturing the high profit margins of the brokerage layer; while Hyperliquid can only retain a thinner commission from the exchange layer.

3. Strategic routing risks.

Once the front end evolves into a true cross-site router, Hyperliquid may be forced into competition in wholesale execution, and can only defend its order flow by lowering fees or increasing rebates.

Overall, Hyperliquid is consciously choosing a low-margin market tier positioning (through HIP-3 and Builder Codes) while allowing a high-margin brokerage tier to grow on top of it.

If the Builder frontend continues to expand, it will increasingly determine the pricing structure for users, control the user retention and monetization interface, and gain bargaining power at the routing level, thus structurally putting long-term pressure on Hyperliquid's commission rate.

Defend distribution rights and introduce non-exchange-based profit pools.

The most direct risk is commodification.

If third-party front-ends can consistently outprice native interfaces at lower prices, and eventually even achieve cross-location routing, Hyperliquid will be pushed toward a wholesale execution-based economic model.

Recent design changes suggest that Hyperliquid is attempting to avoid this outcome while exploring new revenue streams.

Distribution Defense: Maintaining the Economic Competitiveness of Native Front-Ends

A previously proposed staking discount scheme allowed Builders to obtain up to 40% off transaction fees by staking HYPE, effectively providing third-party front-ends with a structurally cheaper path than the Hyperliquid native interface. The withdrawal of this scheme is tantamount to canceling direct subsidies for external distributors to "lower prices."

Meanwhile, the HIP-3 marketplaces were initially positioned as primarily distributed through Builder and not displayed on the main front end; however, these marketplaces are now being displayed in Hyperliquid's native front end with strict listing standards.

The signal is very clear: Hyperliquid will remain license-free at the Builder layer, but not at the expense of its core distribution rights.

USDH: Shifting from trading monetization to monetization through "float" funds.

The launch of USDH aims to reclaim stablecoin reserve revenue that was previously extracted from outside the system. Its publicly disclosed structure involves a 50/50 split of reserve revenue: 50% goes to Hyperliquid, and 50% is used for USDH ecosystem growth. Furthermore, the trading fee discounts offered to USDH-related markets further reinforce this approach: Hyperliquid is willing to reduce the economics of individual transactions in exchange for a larger, more sticky, and balance-linked profit pool.

In effect, this introduces a pension-like source of income for the agreement, whose growth depends on the size of the monetary base, rather than just nominal trading volume.

Portfolio Margin: Introducing a financing economics similar to that of a prime broker.

Combined margin unifies the margins for spot and perpetual contracts, allowing different exposures to offset each other and introducing a native lending cycle.

Hyperliquid will retain 10% of the interest paid by borrowers, making the agreement's economics increasingly dependent on leverage and interest rate levels, rather than just trading volume. This is closer to the revenue model of a brokerage/prime broker than pure exchange logic.

Hyperliquid's Path Towards a "Brokerage-Style" Economic Model

In terms of throughput, Hyperliquid has reached the scale of top-tier exchanges; however, in terms of monetization, it still resembles a market tier: extremely high nominal trading volume coupled with an effective commission rate of single-digit basis points. The gap between it and Coinbase and Robinhood is structural.

Retail platforms, situated at the brokerage level, control user relationships and fund balances, enabling them to monetize multiple profit pools simultaneously (financing, idle cash, subscriptions); while pure trading venues sell execution services. Driven by competition for liquidity and routing, execution naturally tends towards commoditization, continuously compressing net capture. Nasdaq serves as a reference point for TradFi within this constraint.

Hyperliquid initially leaned heavily towards a marketplace prototype. By splitting the distribution layer (Builder Codes) and the product creation layer (HIP-3), it accelerated ecosystem expansion and market coverage; at the cost of this architecture, it could also push economics outward: once a third-party frontend determines the overall price and can route across marketplaces, Hyperliquid risks being squeezed into a low-margin wholesale execution track.

However, recent moves indicate a conscious shift: while maintaining its advantages in unified execution and clearing, it is defending its distribution rights and expanding its revenue streams to a "balance-based" profit pool.

Specifically: the agreement no longer subsidizes external front-ends because they are structurally cheaper than native UIs; HIP-3 offers a more native display; and it introduces a balance sheet-style revenue stream.

USDH will bring reserve returns back into the ecosystem (a 50/50 split, with a fee discount for the USDH market); portfolio margin introduces financial economics by taking a 10% cut of borrowing interest.

Overall, Hyperliquid is converging towards a hybrid model: an execution track as its foundation, upon which distribution defense and balance-driven profit pools are layered. This reduces the risk of being trapped in a low-basis, wholesale trading venue, while moving closer to a brokerage-style revenue structure without sacrificing the advantages of unified execution and clearing.

Looking ahead to 2026, the unresolved question remains: can Hyperliquid further evolve into a brokerage-style economy without compromising its "outsourcing-friendly" model? USDH serves as the clearest litmus test: with a supply of approximately $100 million, the expansion of outsourced issuance appears slow when the protocol does not control distribution. An obvious alternative, which could have been a UI-level default—for example, automatically converting the approximately $4 billion USDC stockpile into the native stablecoin (similar to Binance's automatic conversion to BUSD).

If Hyperliquid wants to truly capture the profit pool of brokerage firms, it may also need brokerage-style behavior: stronger control, tighter integration of native products, and clearer boundaries with the ecosystem team in competition for distribution and balance.