Introduction

HyperSwap is the first decentralized exchange (DEX) built natively on HyperEVM. Unlike Hyperliquid’s L1 DEX, HyperSwap serves a unique role within the ecosystem by enabling direct interaction among protocols and market participants on HyperEVM. This research explores HyperSwap’s core functionalities, tokenomics, liquidity mechanisms, security aspects, and potential benefits.

What is HyperSwap?

HyperSwap is a decentralized exchange that facilitates liquidity provision and trading for tokens launched on HyperEVM. It acts as the primary DEX for HyperEVM-based assets, ensuring that newly created tokens, such as those from @LiquidLaunchHL, have a trading environment without needing integration into the Hyperliquid L1 DEX.

Key functionalities include:

• Liquidity Mining: Incentivizing users to contribute liquidity through a dynamic rewards system.
• Liquidity Provision: Utilizing both Constant Factor AMM and Dynamic Liquidity Market Making models to optimize capital efficiency.
• Dynamic Fees: A feature in development that will introduce adaptive trading fees based on market conditions.

Is HyperSwap Necessary?

While Hyperliquid L1 DEX operates for high-performance trading, HyperSwap is crucial because:

• Tokens launched on @LiquidLaunchHL do not automatically list on the Hyperliquid L1 DEX.
• It provides an environment for seamless liquidity mining and trading incentives.
• It fosters sustainable growth by supporting projects launched on HyperEVM.

Getting Set Up on HyperEVM

To interact with HyperSwap, users must first configure their EVM wallets (e.g., MetaMask, Rabby) to connect with HyperEVM:

1. Open your wallet settings and navigate to “Add Custom Network.”
2. Enter the following details:
   • Network Name: Hyperliquid
   • Chain ID: 999
   • RPC URL: https://rpc.hyperliquid.xyz/evm
   • Currency Symbol: $HYPE
3. Click Save/Confirm, and Hyperliquid will appear under your available networks.

HyperSwap Tokenomics & Design

HyperSwap operates with a dual-token model: $xSWAP (liquidity mining token) and $SWAP (governance and revenue-sharing token). These tokens are yet to be launched, with details to be announced by the team.

Liquidity Mining on HyperSwap

• Users earn $xSWAP by providing liquidity.
• Rewards are proportional to contribution size and duration.
• A maximum vesting period of six months ensures fair rewards. Early withdrawals burn unclaimed rewards, enforcing deflationary pressure.

$xSWAP to $SWAP Conversion & Staking

• $xSWAP holders can convert and redeem tokens through a structured mechanism.
• $SWAP staking provides revenue-sharing benefits, allowing users to earn passive income from the platform’s trading fees.

HyperSwap V2 & V3 Models

HyperSwap currently offers two liquidity models:

HyperSwap V2 Model

• Simple liquidity provision where users deposit token pairs into a pool.
• Providers earn 0.3% of all trades on their pool proportionally.

HyperSwap V3 Model

• Introduces price ranges and flexible fees for liquidity pools.
• Users select a fee tier and define a price range within which their liquidity earns rewards.
• This model enhances capital efficiency and accommodates more complex liquidity strategies.

Risks & Audits

While HyperSwap offers many benefits, users should consider potential risks:

• Smart contract risks: Even audited protocols can have vulnerabilities.
• Impermanent loss: Liquidity providers face opportunity costs when market prices fluctuate.

HyperSwap has undergone audits with @peckshield and public reports are available for verification.

Points & Potential Airdrop

HyperSwap has introduced a points program for early adopters. Though currently untrackable, users can accrue points by using the platform. This may later translate into an airdrop or token reward system once $xSWAP and $SWAP launch.

To start earning points, users must register a unique Username ID on the “Points” page of HyperSwap.

Conclusion

HyperSwap is a crucial component of HyperEVM, offering a specialized DEX that enhances liquidity, fosters innovation, and supports emerging projects. With robust tokenomics, liquidity incentives, and security measures, it stands as a promising development within the Hyperliquid ecosystem.