Not just about trading transparency: How does Hyperliquid move the exchange's "growth black box" onto the blockchain?

Written by: Candy@TEDAO

Introduction | Can the "business ledger" behind transactions also be made public?

In the world of DeFi, every transaction is recorded on an immutable public ledger, which anyone can audit. We are accustomed to seeing every exchange on decentralized exchanges like Uniswap, but the information often stops at the level of "this transaction occurred."

Where does this transaction come from? Was it recommended by a KOL or brought in by some trading tool? For a long time, such attribution has relied on internal systems or centralized backend processing within projects, known as the "growth black box": the transaction itself can be verified on-chain, but the sources of promotion are usually tracked off-chain. This is not incidental, but rather a consideration of technology and cost—adding extra identifiers to each transaction on mainnets like Ethereum would significantly increase gas fees and could also pose security challenges, which is why many projects choose to store their "commercial ledgers" off-chain.

Hyperliquid is a decentralized trading platform operating on a self-developed underlying blockchain network (self-researched L1), where users can engage in perpetual contract trading. Unlike other platforms, it chooses to publicly share key business data and trading logic on-chain, achieving comprehensive transparency from financial transactions to growth attribution, making the "back office" of the exchange intuitively present as a traceable growth map.

1 | Public "business ledger": Understanding where growth comes from

The data dashboard of Hyperliquid (provided by the third-party data analysis platform Allium) resembles a real-time "war room." It not only observes macro trends but also reveals who (wallet address), what tools were used, and when the market changes were driven. The approach is to structure the source information into the protocol path, first clarifying two dimensions:

Builder (Order Level): Record the tools used for placing orders (such as the builder field) in the order parameters. This allows for comparison of transaction volume, fees, and retention by tool, as well as source attribution.

Referral (Account Level): Bind "Who referred you" on the account side, with discounts and commissions settled on-chain according to agreement rules. This allows for on-chain settlement and official/third-party panel review of new promotions and transactions, facilitating budget and ROI assessment.

Figure 1: Hyperliquid ecosystem overview provided by Allium. Data source: Allium:

Example: How to connect trading with growth?

Scene A (Builder | Order Level)

Trader Bob uses developer David's "TradePro" tool to place an order, which carries David's address (builder parameter); the protocol automatically records that address and the corresponding fees on-chain, and completes the distribution according to the rules.

Scenario B (Referral | Account Level)

Trader Alice registered using KOL Emma's referral code, establishing a verifiable on-chain referral binding between Alice's account and Emma; thereafter, Alice enjoys a fee discount on each of her transactions, with the system statically calculating the discount at the account level and automatically allocating the commission to Emma.

Figure 2&3: Overview of income and user growth from different Builders and Referrals. Data source: Allium

Two | When growth contributions become trustless

When "growth attribution" moves from off-chain to on-chain, the entire value chain undergoes a transformation—let's look at it from three dimensions: rules, settlement, and data.

1 Rule: From "Variable Interpretation" to "Protocol Layer Rules"

Key logic is solidified into contracts and executed collectively by the network; temporary interpretations are replaced by code constraints, enhancing the neutrality and predictability of the rules.

2. Settlement: From "Manual Approval" to "Automatic Clearing"

Taking Builder (order level) as an example: Users first set the "maximum fee authorization" (ApproveBuilderFee) for the developer's address, and each subsequent order carries the builder parameter. The protocol completes the revenue sharing settlement on-chain without any manual intervention.

3. Data: From "Promotional Report" to "Traceable Ledger"

All key actions—placing orders, canceling orders, clearing, applying discounts—are recorded on the chain, and anyone can independently verify them in the public ledger without just listening to the promotion.

This brings direct impact:

For developers (Builder) and promoters (Referral): Return to the essence of contribution.

Automatically settle based on on-chain contributions, without relying on relationships or offline statistics, making value creation visible. Excellent developers and promoters can "vote with code" instead of "lobbying with PPT."

On Project Operations and DAO Governance: From Subjective to Data Consensus

Make decisions based on unified metrics (e.g., "Promoter Contribution × Retention × ARPU"), discussing cost reduction.

For example, the "Builder User Retention Rate" dashboard shows the differences in user quality brought by different tools: some attract many new users but have high churn in the following week; others attract fewer new users but have stable retention, making the incentive direction clearer.

Figure 4: Builder User Retention Rate Dashboard, tracking new customers and subsequent retention on a weekly basis. Data source: Allium

For ordinary traders: Cut through the noise with facts

Can independently identify "who is leading the rhythm and which tools are effective," and be less affected by group buying and opaque information.

Three | The Cost of Transparency and the Boundaries of Privacy

However, any technological paradigm is a double-edged sword. When transparency is pushed to the extreme, new risks and challenges also emerge:

Strategy Leak and Alpha Decay: The Evaporation of Trade Secrets

For professional traders and developers, when their trading patterns and tool logic are clearly tracked, their profit alpha is exposed to the sunlight, which can be easily replicated and imitated, leading to the rapid failure of strategies.

Precise Sniping and Market Manipulation: A Transparent Hunting Ground

The intentions of large transaction traders become apparent, which may lead to malicious following or being targeted by counterparties who utilize position information for precise strikes, increasing the risks of large capital operations.

Financial Privacy Spillover: The Public "Naked Wealth"

User transaction history and profit and loss status (PnL) are fully disclosed, such as ecological panels (like Allium) aggregating liquidation events to form leaderboards; however, this also exposes addresses and nominal losses, which could more likely attract hackers, phishing, or even offline security threats.

Figure 5: Liquidation leaderboard, showing the liquidated addresses and the amount of loss. Data source: Allium

The solution on the road

To address these risks, the industry has turned its attention to verifiable privacy technologies represented by zero-knowledge proofs (ZKP). Its core objective is to prove to the protocol that a certain contribution was indeed generated by a specific promoter or tool, without disclosing the identity or strategy details of the trader, and to complete on-chain settlement based on this.

This path provides a clear technical direction to achieve the ideal state of "both verifiable and protective." However, the challenges of this technology in terms of cost, latency, and anti-witchcraft still require a lot of engineering refinement.

Conclusion | Beyond financial transparency, it is also a reconstruction of business.

Hyperliquid's attempt extends the DeFi principle of "trustless" from the transaction level to the source level, demonstrating what protocol-native growth is: it fully places the "user acquisition - trading - profit sharing" closed loop on-chain, making it both traceable and verifiable, laying the foundation for a fairer incentive mechanism.

However, this design of attributing growth to the on-chain also raises a core challenge: how to better protect personal strategies and privacy without sacrificing verifiability. Only when the "traceable ledger" and "anonymous rights" coexist harmoniously can the growth mechanism be considered to have completed a thorough migration from off-chain to on-chain.