Is Hyperliquid a VC coin?
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The debate over whether Hyperliquid is a "VC coin" stems from its funding structure, token distribution, and the broader sentiment in the crypto community about venture capital (VC) involvement in projects. A "VC coin" typically refers to a cryptocurrency heavily backed by venture capitalists, often with large token allocations to VCs, which can lead to concerns about centralization, price manipulation, or community dilution. Let’s break down the arguments on both sides based on available information.
Arguments Against Hyperliquid Being a VC Coin
Hyperliquid has positioned itself as a community-focused project, and several points support the claim that it is not a VC coin:
Self-Funded Development: Hyperliquid’s team, led by co-founder Jeff Yan, claims to have developed the platform without external venture capital, initial coin offerings (ICOs), or pre-sales. Instead, it’s suggested that the project was funded through profits from Yan’s previous venture, Chameleon Trading, a market-making firm. This self-funded approach avoids the influence of VCs, aligning with a narrative of independence and fairness.
Community-Centric Airdrop: Hyperliquid’s token, HYPE, was launched with a significant airdrop in November 2024, distributing 31-33% of the total supply to over 90,000 users, with no vesting periods for recipients. Unlike many projects where VCs receive large token allocations (sometimes 20% or more), Hyperliquid’s airdrop was designed to prioritize the community, with no private investors or VCs reportedly receiving preferential allocations. This has been praised as a “fair launch” model, contrasting with VC-heavy projects like Scroll, Aptos, or Starknet, where low community allocations sparked criticism.
No VC Pressure: By avoiding VC funding, Hyperliquid’s team claims to operate without external pressure to prioritize investor interests over user needs. This is highlighted by their revenue model, where trading fees are redistributed to the community via the Hyperliquidity Provider (HLP) vault and USDC assistance fund, rather than being funneled to private investors. The platform’s tokenomics, including buybacks and burns using 54% of gross profit and 100% of net profit, further emphasize user benefits over investor profits.
Community Sentiment on X: Posts on X reflect strong community support for Hyperliquid’s anti-VC stance. Users have celebrated its zero-VC model, citing it as a refreshing departure from projects where VCs allegedly dominate token supply and dump on retail investors. For example, posts highlight Hyperliquid’s organic growth, with billions in trading volume driven by user activity rather than VC-driven hype.
Token Performance: Unlike many VC-backed tokens that experience post-airdrop price dumps, HYPE’s price surged from $4 to over $35 in weeks, suggesting strong community trust and demand. This contrasts with projects like Scroll, where 5.5% of tokens allocated to Binance led to community backlash and price declines.
Arguments Suggesting Hyperliquid Might Be a VC Coin (or Have VC-Like Traits)
Despite the narrative of being VC-free, some skepticism exists, largely speculative, about Hyperliquid’s funding and token distribution:
Opacity Around Initial Funding: While Hyperliquid claims to be self-funded, the exact source of its initial capital remains unclear. Building a high-performance Layer-1 blockchain and a decentralized exchange (DEX) requires significant resources, and some speculate that Chameleon Trading or other insider entities may have acted as quasi-VCs by providing funds or receiving a large portion of the HYPE airdrop. Without transparent disclosure, this raises questions about whether insiders control a significant token share, mimicking VC-like influence.
Centralization Concerns: Hyperliquid operates with only 16 validators, compared to Ethereum’s 800,000+, which critics argue makes it relatively centralized for a DEX. This structure, combined with the team’s control over validator selection, could suggest a level of control akin to VC-backed projects, where insiders hold disproportionate power. If insiders or early affiliates received large airdrop allocations, this could align with VC coin characteristics, even without formal VC involvement.
Speculation on Airdrop Distribution: Some sources question whether the airdrop was as “fair” as claimed. There’s speculation that Chameleon Trading or other market-making entities connected to the founders may have received substantial HYPE allocations, potentially giving insiders significant control over the token supply. This would mirror the token concentration seen in VC coins, despite the lack of formal VC funding. However, no concrete evidence supports this claim, and it remains speculative.
JELLYJELLY Exploit Backlash: The March 2025 exploit involving the JELLYJELLY token, which caused a $12-20 million loss to Hyperliquid’s HLP vault, sparked criticism of the platform’s centralized response. Hyperliquid’s decision to delist the token and settle positions at a fixed price raised concerns about opaque governance, with some, like Bitget CEO Gracy Chen, calling the response “immature” and “unprofessional.” This incident fueled perceptions that Hyperliquid’s operations might not be as decentralized or community-driven as claimed, potentially aligning it with the control dynamics of VC-backed projects.
Skepticism on X: A post on X questions the narrative that Hyperliquid’s success is solely due to its anti-VC stance or airdrop strategy, suggesting that its performance is driven more by its product quality than its funding model. This implies that the “no VC” narrative might be overstated as a marketing tactic to appeal to retail investors wary of VC coins.
Broader Context: The VC Coin Debate
The debate around Hyperliquid ties into a larger sentiment shift in the crypto community, particularly on platforms like X, where retail investors have grown frustrated with VC-backed projects. Projects like Scroll, Orderly, and Berachain have faced backlash for low community allocations (e.g., Scroll’s 5.5% to Binance) and high fully diluted valuations (FDVs) with low circulating supply, which often benefit VCs at the expense of retail investors. Hyperliquid’s approach—large airdrops, no VC allocations, and revenue redistribution—has been hailed as a counterpoint to this trend, resonating with retail investors seeking “fair” projects. However, the lack of full transparency about its funding and token distribution leaves room for skepticis
Conclusion
The evidence leans heavily toward Hyperliquid not being a traditional VC coin, as it lacks formal VC funding, prioritizes community allocations, and has built a strong reputation for fairness through its airdrop and tokenomics. Its self-funded model and rejection of VC influence align with the community’s desire for projects that avoid insider dominance. However, speculative concerns about insider allocations (e.g., via Chameleon Trading) and centralization risks (e.g., limited validators and governance decisions) suggest that Hyperliquid may not be entirely free of VC-like traits, even if no formal VCs are involved. Without definitive proof of insider control, these concerns remain speculative.
For a balanced perspective, Hyperliquid’s success—$12 billion in daily trading volume, $11 billion market cap, and a loyal community—suggests its model resonates with users, regardless of the VC debate. Traders should still do their own research (DYOR), especially given the platform’s relative centralization and the JELLYJELLY incident, to assess its long-term reliability. Always verify claims about funding and token distribution through primary sources like the Hyperliquid Foundation’s announcements or on-chain data.
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