Hyperps

High level summary

Hyperps (Hyperliquid-only perps) trade like perpetual contracts that users are familiar with, but do not require an underlying spot or index oracle price. Instead, the funding rate is determined relative to a moving average hyperp mark price in place of the usual spot price. This makes the hyperp price more stable and less susceptible to manipulation, unlike usual pre-launch futures.

This new derivative design does not require an underlying asset or index that exists at all points of the hyperp's lifetime, only that the underlying asset or index eventually exists for settlement or conversion.

When trading hyperps, funding rates are very important to consider. If there is heavy price momentum in one direction, funding will heavily incentivize positions in the opposite direction for the next eight hours. As always, be sure to understand the contract before trading.

Conversion to vanilla perps

For a hyperp tracking ABC (e.g. ABC = ZRO, TIA, PYTH, JUP, W, or STRK), when ABC/USDT is listed on Binance, OKX, or Bybit spot trading, ABC-USD will convert to a normal ABC-USD perp.

For ZRO, this conversion only happens if the max supply is exactly 2 billion. Otherwise, ZRO-USD will settle to the fully diluted market cap divided by 2 billion one week after CEX listing. After settlement, the hyperp will be delisted and a new vanilla perp will be listed. Either way, the price of the ZRO-USD hyperp eventually converges to the spot ZRO price after the token exists. See section below for further details on ZRO conversion/settlement.

Technical specifications of ZRO conversion and settlement

Let T_cex be the time that the first trade happens on Binance, Bybit, or OKX ZRO/USDT spot pairs.

Let T_announce be the time that the LayerZero team officially releases the tokenomics announcement for ZRO.

If the max supply of ZRO is exactly 2 billion, ZRO-USD will convert to a normal perp tracking ZRO spot prices at T_convert = max(T_cex + 1day, T_announce + 1day). Before T_convert, the hyperp funding formula will still apply. The max supply will be based on the official LayerZero tokenomics documentation.

If the max supply of ZRO is not exactly 2 billion as determined by the official documentation (e.g. 100M max supply or infinite max supply), ZRO-USD will settle to Price_settle = the average of CoinGecko and CoinMarketCap’s reported fully diluted market caps for ZRO at T_cex + 1week, divided by 2 billion.

If ZRO tokens do not exist by 2025-01-01 or has not listed on Binance, Bybit, or OKX by then, ZRO-USD will settle to Price_settle if Price_settle exists, and otherwise 0.1.

Open interest caps

ZRO, TIA, PYTH, JUP, W, and STRK hyperps launched with $1000000 open interest cap to start. This limit may be relaxed as the market matures.

Hyperp mechanism details

Hyperps work just like normal perpetual contracts, except the external spot/index oracle price is replaced with an 8 hour exponentially weighted moving average of the last day's minutely mark prices.

Precisely, oracle_price(t) = min[sum_{i=0}^1439 [(t - i minutes < t_list ? initial_mark_price : mark_price(t - i minutes)) * exp(-i/480)] * (1 - exp(-1/480)) / (1 - exp(-3)), intial_mark_price * 4]

Here a ? b : c evaluates to b if a is true and otherwise c.

Samples are taken on the first block after each unix minute, but the timestamps used are the nearest exact minute multiples. When there are fewer than 480 mark price samples, the initial mark price is used as the padding value.

Funding rate premium samples are computed as 5% of the usual clamped interest rate and premium formula. See Funding docs for more details.

Note that the oracle price is also restricted to be at most 4 times the one month average mark price as an additional safeguard against manipulation.