On June 16, the HYPE token reached a new historical peak of 76.965 USDT, marking a daily gain of approximately 10% and triggering liquidation losses exceeding 11.5 million USD for short positions.

Concurrently, institutional interest remained robust, with three US-based spot HYPE ETFs securing roughly 180 million USD in net inflows during their first month of operation. Data compiled by Woofun AI indicates that despite this capital influx, the operational landscape within the Hyperliquid ecosystem faced significant contraction. Between May and June, multiple protocols spanning lending, NFTs, stablecoins, and decentralized exchanges announced sequential closures, creating a stark contrast between the token's price performance and the health of its underlying application layer.

Hyperliquid has responded to this environment by allocating approximately 97% of protocol fees to an Assistance Fund dedicated to buying back and permanently destroying HYPE tokens. Current figures show daily buybacks of around 34,000 HYPE tokens, valued at approximately 2.57 million USD, projecting an annual buyback scale of 940 million USD against total protocol revenues of 976 million USD. This structure yields a price-to-earnings ratio of roughly 73 times and a buyback yield near 5.6%. The engine fueling these buybacks is the HyperCore perpetual contract trading layer, which generated over 240 billion USD in trading volume over the past 30 days. Woofun AI notes that this revenue stream is highly diversified, with crypto perpetual contracts like BTC, ETH, and SOL contributing 55% of daily fees, commodities accounting for 22%, stock indices for 12%, and spot trading for 6%.

This revenue composition fundamentally redefines HYPE as an application-oriented stock rather than a traditional ecosystem token. Its valuation is tethered directly to HyperCore trading fees, showing minimal correlation with the total value locked in HyperEVM or the count of active DeFi protocols. This logic diverges sharply from ETH, where token pricing relies on a thriving ecosystem to drive gas consumption; consequently, project failures negatively impact ETH. In the Hyperliquid model, the success or failure of HyperEVM projects does not materially affect HyperCore trading volumes or the pace of Assistance Fund buybacks. Investors in HYPE are therefore exposed to the operational risks of the perpetual contract trading business rather than the specific survival rates of individual DeFi protocols.

The fragility of the ecosystem layer was evidenced by the closure of several high-profile projects. Ventuals, which facilitated over 650 million USD in cumulative trading volume for more than 11,000 traders as of June 15, announced its shutdown with an orderly settlement process for 11 markets, including those operated by OpenAI and Anthropic. Users received full refunds of HYPE tokens at a 1:1 ratio. Similarly, Felix announced on June 8 the termination of services on June 20, shutting down its HIP-3 DEX and active markets following the suspension of USDH. HypurrFi, the leading lending protocol on HyperEVM with a peak TVL exceeding 300 million USD, cited a well-thought-out operational decision rather than security vulnerabilities, transferring its infrastructure to Euler Finance with final settlements completed on July 15.

Further consolidating the trend, Drip.Trade, the sole NFT exchange on HyperEVM, ceased operations on June 15. Simultaneously, Native Markets announced on May 14 the transfer of USDH stablecoin brand rights to Coinbase, designating it as the official USDC provider on Hyperliquid. These five closures covered critical DeFi infrastructure categories: lending, NFTs, stablecoins, RWA private markets, and DEXs. These were not marginal experiments but established protocols with genuine user bases and trading volumes. Woofun AI analysis suggests that the simultaneous rise of HYPE and the collapse of these ecosystem projects points to a deeper structural issue rather than isolated failures.

The root cause lies in Hyperliquid's minimalist design philosophy, which provides blockchain infrastructure without engaging in operational support. Since HyperEVM's launch in February 2025, it attracted over 170 projects, yet none received official grants, coordinated market-making, or liquidity support. Projects were thrust into a fully competitive secondary market from day one, relying entirely on their own capabilities. While early entrants could leverage existing traffic, the saturated market conditions of 2026 made survival dependent on overcoming initial hurdles without external aid.

Furthermore, the HIP-3 mechanism, allowing anyone to deploy perpetual contract markets on HyperCore, created internal competition for user attention. TradeXYZ, the leading HIP-3 project, captured approximately 97% of its category's market share, leaving negligible room for new entrants.

Ultimately, protocol projects faced a dual challenge: competing against external rivals while contending with the liquidity-siphoning effect of Hyperliquid itself. As HyperCore succeeded in attracting traffic and capital, it structurally limited the resource availability for HyperEVM projects. This dynamic was not a technical failure of the blockchain but an inherent outcome of a business model that concentrates resources in its core trading layer. The result is a bifurcated ecosystem where the token thrives on centralized trading volume while the decentralized application layer struggles to sustain itself without direct intervention.