TradeXYZ and Hyperliquid: Symbiotic 50% Split Defies Separation Fears

Woofun AI reports that market caution has intensified as investors demand tangible returns from AI spending without cash flow erosion, while crypto leadership shifts to SOL and DEXs despite ETF outflows, prompting a deep dive into the 50% revenue symbiosis between TradeXYZ, Hyperliquid, and HIP-3.

Over the past week, major benchmarks displayed divergent performance trajectories. The S&P 500 and gold posted modest gains of 0.74% and 0.65%, respectively, whereas the Nasdaq remained largely flat. BTC underperformed significantly, declining by 3.0% over the period. This macro backdrop was shaped by earnings releases from major AI companies, revealing a stark divide in market reception. Amazon surged by over 15%, marking its strongest quarterly revenue growth in over four years, driven by AWS revenue rising 37% year-on-year to $42.

2 billion. Microsoft also climbed by more than 15%, buoyed by stronger-than-expected cloud business growth, although its capital expenditure guidance disappointed Wall Street. In sharp contrast, Meta dropped 10%, with its second-quarter free cash flow plummeting by 91% as AI-related capital spending weighed heavily on profits. A clear theme emerged: the market no longer rewards mere AI investments but demands proven returns without sacrificing cash flows.

Meanwhile, the crypto sector faced headwinds, with BTC and ETH ETFs experiencing net outflows of $255 million and $69 million, respectively. Risk sentiment was further dampened by bond market trends, as the yield on 30-year U.S. Treasury bonds rose to 5.23%, the highest level since June 2007.

Within the crypto ecosystem, leadership dynamics shifted decisively. The SOL ecosystem performed best this week, rising 8.5%, while the Ethereum ecosystem, after several weeks of strength following the launch of Robinhood Chain, dropped 8.8%. The DEX sector secured second place, rising 5.2%. The SOL rally was primarily driven by META, whose token surged 36% after being listed on Upbit; PUMP rose 3%, accounting for about one-third of the index’s weight.

Notably, Pump.fun’s trading volume and revenue have been recovering from their June lows, suggesting that "trench" activities may be returning. The DEX sector was led by Uniswap, which rose 6.5% over the week. UNI benefited from the expansion of fee collection to Robinhood Chain and from some Uniswap v4 deployments starting to charge protocol fees. Many interesting on-chain innovations recently, including FWA which we covered last week, are being built using Uniswap v4 hooks, making Uniswap and its broader ecosystem worthy of close attention.

As TradeXYZ continues to dominate crypto trading volume, RWA now accounts for over 50% of Hyperliquid’s trading volume, sparking intense discussions about conflicts of interest and the high concentration of activity on Hyperliquid. Concerns range from reasonable inquiries into how Hyperliquid will monetize HIP-3 in the long term to somewhat far-fetched fears that TradeXYZ might leave Hyperliquid. It is necessary to clarify the current relationship structure. TradeXYZ is an independent team that builds on Hyperliquid, programmed to allocate 50% of HIP-3 revenues to Hyperliquid while keeping the other half for itself. We found that TradeXYZ, which is the same team behind Unit, has used and continues to use its HIP-1 spot revenue to buyback HYPE, but it hasn’t done the same with HIP-3 revenues. This distinction highlights the operational independence and specific financial strategies employed by the team.

The first concern, which we consider the weakest, is that TradeXYZ might leave Hyperliquid because the 50% split is too high and it could capture more value on its own. As early as April, I argued the exact opposite: Hyperliquid outsources too much of the value of its largest market to deployers. To understand why separation is unlikely, one must examine what each side offers. Hyperliquid provides the infrastructure layer, collateral, and most importantly, the user base that supports the vast majority of TradeXYZ’s trading volume. For TradeXYZ to leave, it would need to rebuild the trading platform layer, which is the hardest part of the entire tech stack, essentially giving up its entire user base and self-sabotaging its reputation in the process. This structural dependency creates a formidable barrier to exit.

For Hyperliquid, taking RWA under its own control would also be a reputational suicide. Weakening the key deployers that have contributed so much to its success would send a signal to all future HIP-3 deployers and builders on Hyperliquid that any sufficiently successful team could be replaced. This is one of the most typical symbiotic relationships in the crypto space, and from both reputational, economic, and architectural perspectives, neither side has reason to leave the other. The mutual reliance ensures stability, as both parties benefit from the continued integration and shared growth of the HIP-3 ecosystem.

The second concern relates to monetization, which is more plausible but requires closer examination. First, it would be dishonest to ignore TradeXYZ’s execution capabilities; without it, Hyperliquid’s RWA market couldn’t have reached its current size. Hyperliquid would own 100% of a much smaller pool, worth less than half of what it is today. This trade-off underscores the value of TradeXYZ’s contribution to market depth and liquidity. The execution efficiency provided by TradeXYZ allows Hyperliquid to capture a larger overall market share, even if it means sharing the revenue. This dynamic is crucial for understanding the long-term sustainability of the partnership.

Woofun AI data shows that the 50% fee split isn’t Hyperliquid’s only source of income; it also earns from priority writing fees and reading fees paid by market makers. It benefits from secondary effects as well, such as increased USDC supply—after adjusting for on-chain balances, Hyperliquid keeps 90% of the resulting revenue. Holding volumes serve as an indicator: since HIP-3 was launched, holding volumes related to it have increased by $3.68 billion, while USDC supply grew by $1.38 billion over the past year, with crypto holding volumes declining by year-end. As more traders bring in USDC to bet on RWA, the revenue generated from this supply also goes to Hyperliquid. This diversified income stream reduces reliance on the direct fee split and enhances overall profitability.

This revenue is estimated at around $30 million per month, already exceeding the total perpetual fee pool for HIP-3 split evenly between Hyperliquid and TradeXYZ. The comparison highlights the significance of indirect revenue sources for Hyperliquid. While the 50% split on HIP-3 fees is prominent, the additional income from market maker fees and USDC supply growth provides a substantial financial cushion. This structure allows Hyperliquid to maintain its position as a leading platform while supporting the growth of deployers like TradeXYZ. The financial metrics demonstrate that the symbiotic relationship is not just strategically sound but also economically robust.

For us, the most interesting question isn’t the 50/50 split between TradeXYZ and Hyperliquid, but rather how the two sides can move beyond a growth-oriented model and transition to a more stable and higher fee structure. This evolution will determine the long-term viability and profitability of the partnership. As the market matures, the ability to adapt and optimize revenue streams will be critical for both parties. The current setup provides a strong foundation, but future success will depend on strategic adjustments to ensure sustained growth and stability in an increasingly competitive landscape.