What Is HIP-1? Hyperliquid Native Token Standard Explained

What Is HIP-1?

HIP-1 (Hyperliquid Improvement Proposal 1) is the native token standard on Hyperliquid. It defines how fungible tokens are created, managed, and traded on HyperCore — Hyperliquid's high-performance L1 blockchain. If ERC-20 is the token standard for Ethereum, HIP-1 is the equivalent for Hyperliquid.

HIP-1 tokens are first-class assets on HyperCore. They trade directly on Hyperliquid's native spot order book — the same infrastructure that powers its perpetual futures markets. This means HIP-1 tokens inherit all of HyperCore's performance characteristics: sub-second finality, no gas fees for trading, and the ability to interact with the full depth of Hyperliquid's liquidity.

The standard was introduced alongside Hyperliquid's spot trading launch and has since become the foundation for the ecosystem's growing roster of native tokens. PURR, the first community token, HYPE itself, and dozens of other tokens are all HIP-1 assets.

Why HIP-1 Exists

Before HIP-1, Hyperliquid only supported perpetual futures trading with USDC as the settlement currency. There was no mechanism for issuing native tokens or trading spot pairs on the chain. HIP-1 was created to fill this gap — enabling a native spot market that could complement the perpetual order book.

The design choice to create a dedicated token standard (rather than simply supporting ERC-20 tokens on HyperEVM) was deliberate. HyperCore processes orders through a deterministic state machine optimized for trading. By making tokens native to this layer, they can be traded with the same speed and cost efficiency as perpetual contracts — something that would not be possible if tokens only existed on the EVM side.

HIP-1 also enables tight integration between spot and perpetual markets. Because both HIP-1 spot tokens and perpetual contracts live on HyperCore, the protocol can use spot order book data to calculate perpetual index prices, enable spot-perp basis trading, and allow seamless cross-margining between spot and perp positions.

How HIP-1 Works

A HIP-1 token is defined by a set of parameters at deployment: the token name, ticker symbol, total supply, decimals, and initial distribution. Once deployed, the token exists natively on HyperCore and can be transferred between addresses, traded on the spot order book, and held in Hyperliquid wallets.

Token tickers on Hyperliquid are unique and are obtained through a Dutch auction process. To list a new token, you first bid on a ticker name (for example, "PURR") in a descending-price auction. This mechanism prevents ticker squatting and ensures that serious projects can obtain the names they want, while the cost deters spam listings. The auction proceeds are burned or directed to the protocol.

Once a ticker is secured, the deployer registers the token with its supply parameters and triggers the initial listing on the spot order book. The token is immediately tradeable — there is no waiting period or approval process beyond the ticker auction.

HIP-1 tokens can be transferred between HyperCore addresses with no gas cost. Trading on the spot order book follows the same maker-taker fee model as perpetual trading: takers pay a small fee, makers receive a rebate. This fee structure incentivizes deep liquidity on spot pairs, mirroring the dynamics that have made Hyperliquid's perpetual order book so liquid.

How PURR Was Launched

PURR was the first community token launched via HIP-1 and serves as the canonical example of how the standard works in practice. Launched in April 2024, PURR was a cat-themed community token distributed entirely via airdrop to existing Hyperliquid users.

The launch process was straightforward. The PURR team secured the "PURR" ticker through the Dutch auction, deployed the token with a fixed supply, and airdropped it to HYPE holders. Within minutes of the airdrop, PURR was trading on the native spot order book with real liquidity — no external DEX listing, no centralized exchange listing, and no liquidity bootstrapping event on a third-party platform.

PURR's launch demonstrated several key features of HIP-1. The token was immediately tradeable on a professional-grade order book with sub-second execution. Liquidity formed quickly thanks to HIP-2 (the automated liquidity bootstrapping mechanism). And because PURR was a HyperCore-native asset, it could later be used as the underlying for a PURR perpetual futures contract — creating a complete spot + derivatives market for a token that had been launched entirely within Hyperliquid's native infrastructure.

PURR reached a peak market capitalization of several hundred million dollars, making it one of the most successful community token launches in DeFi history. Its success validated HIP-1 as a viable token standard and attracted dozens of subsequent projects to launch tokens on Hyperliquid.

HIP-1 vs ERC-20

HIP-1 and ERC-20 serve the same fundamental purpose — defining how fungible tokens work — but they operate in very different environments and have different tradeoffs.

Performance. HIP-1 tokens on HyperCore trade with sub-second finality and zero gas fees. ERC-20 tokens on Ethereum (or even on HyperEVM) require gas payments for every transfer and trade. For high-frequency trading use cases, HIP-1's performance is significantly better.

Composability. ERC-20 tokens on Ethereum benefit from the world's largest smart contract ecosystem — thousands of DeFi protocols, bridges, aggregators, and tools. HIP-1 tokens are currently limited to Hyperliquid's native ecosystem. However, HIP-1 tokens can be bridged to HyperEVM as wrapped assets, gaining access to the growing HyperEVM DeFi ecosystem.

Listing and liquidity. HIP-1 tokens are listed directly on Hyperliquid's native order book — a professional-grade CLOB with deep liquidity. ERC-20 tokens typically start on AMM DEXs (Uniswap, SushiSwap) with fragmented liquidity and high slippage. The order book model provides better price discovery and tighter spreads from day one.

Developer tooling. ERC-20 benefits from years of mature tooling: Solidity libraries, Hardhat/Foundry, block explorers, and wallet integrations. HIP-1 tooling is newer and more limited, though it is improving rapidly as the ecosystem grows.

Spot Trading on HyperCore

HIP-1 enables native spot trading on Hyperliquid's order book. This is a central limit order book (CLOB) — the same type of order book used by every major stock exchange and centralized crypto exchange. It supports limit orders, market orders, and the full range of order types available on the perpetual side.

Spot pairs on HyperCore are quoted against USDC. When you buy PURR/USDC, for example, you are placing an order on the native spot order book, which is matched by HyperCore's deterministic matching engine. The trade settles on-chain in under a second — the PURR tokens appear in your Hyperliquid wallet immediately.

The spot order book integrates with the perpetual market in important ways. The spot price feeds into the perpetual's index price calculation, creating a natural arbitrage relationship that keeps spot and perp prices aligned. Traders can execute basis trades — simultaneously buying spot and selling perps — within a single platform, something that previously required maintaining accounts on multiple exchanges.

HIP-2: Bootstrapping Liquidity

HIP-2 is the companion proposal to HIP-1, designed to solve the cold-start liquidity problem for newly launched tokens. When a new HIP-1 token is deployed, its order book starts empty — there are no bids, no asks, and no price discovery. HIP-2 provides an automated mechanism to bootstrap initial liquidity.

The mechanism works by creating an automated market-making strategy that places resting orders on both sides of the order book within a defined price range. The token deployer seeds the strategy with an initial inventory of tokens and USDC. As trades occur, the strategy automatically replenishes its orders, maintaining continuous liquidity around the market price.

HIP-2 is not an AMM in the traditional sense — it does not use a bonding curve or constant-product formula. Instead, it places discrete limit orders on the order book, mimicking the behavior of a human market maker. This approach provides better execution for traders (tighter spreads, less slippage) while still being fully automated.

Once organic liquidity develops — real market makers begin quoting the token, trading volume picks up, and the community starts providing liquidity — the HIP-2 strategy can be reduced or removed. It serves as a bridge between launch and maturity, ensuring that new tokens are tradeable from their first moment of existence. Together with HIP-1, it creates a complete pipeline for token creation, listing, and initial liquidity that is unique to the Hyperliquid ecosystem.

Frequently Asked Questions