Hyperliquid Faces Scrutiny Over Centralization and Regulatory Risks

Key Points:* Hyperliquid’s centralization highlights decentralized finance regulatory concerns.

• In-depth analysis of staking control and governance.
• Washington’s lenient stance raises questions among experts. Hyperliquid, a Singapore-based trading platform operated by a small team, is raising concerns over its decentralization as it attracts attention from major investors like Paradigm and Pantera Capital.

This scenario underscores the ongoing tension between decentralization ideals and centralized control within DeFi, posing potential regulatory challenges and impacting investor sentiment in the cryptocurrency market.

Hyperliquid’s Centralized Structure Amid Growing Regulatory Concerns

Hyperliquid, operating from Singapore, runs a minimalist trading platform controlled by a small team, sparking debates over its decentralization. Despite Paradigm and Pantera Capital’s support, the absence of external investors indicates a self-sustained operation. The platform’s unique appeal lies in its lack of identity verification, leading to rapid growth.

Centralized control has raised flags about Hyperliquid’s governance structure. Almost two-thirds of the HYPE token’s total supply is under the Hyper Foundation’s control, granting it substantial influence over validator nodes and governance. However, the foundation has recently abstained from votes, showing support for community consensus. Kam Benbrik, Head of Research at Chorus One, highlighted this issue, stating, “If you control more than two-thirds of the stake, you basically can achieve control on-chain.“

Reactions vary, with experts like Kam Benbrik spotlighting potential regulatory challenges. While Washington’s lenient stance currently allows Hyperliquid’s growth, critics question how long this can persist without increased regulatory intervention.

Market Performance and Future Implications for Hyperliquid

Did you know? The centralization of Hyperliquid mirrors early decentralized exchanges like Uniswap, which also faced regulatory scrutiny during their growth phases.

Hyperliquid, under ticker HYPE, is priced at $36.09, with a market cap of $12.15 billion. The platform covers 73% of the decentralized perpetual trading volume, illustrating its market dominance. Over the past 30 days, HYPE’s value decreased by 37.48%, highlighting market volatility.

Hyperliquid(HYPE), daily chart, screenshot on CoinMarketCap at 12:25 UTC on October 18, 2025. Source: CoinMarketCap Coincu’s research team emphasizes potential outcomes in regulation and technological growth. If growth persists under current regulations, enhanced scrutiny may follow, similar to precedents in the sector. Historical patterns suggest infrastructure upgrades could support decentralization efforts, safeguarding market stability.