everyone is saying Hyperliquid is becoming āKYC.ā
i think thatās missing the bigger picture.
whatās being introduced isnāt KYC. itās programmable compliance.
from the testnet transactions, HIP-3 deployers appear to be able to allowlist wallets that can open positions, while non-approved wallets can still reduce risk and exit. thatās an important design choiceāit prevents users from getting trapped while still enforcing access controls.
the protocol itself remains permissionless.
the market becomes permissioned only if the deployer wants it to be.
thatās a massive distinction.
why does this matter?
because institutions donāt avoid onchain trading because of the technology. they avoid it because they canāt satisfy compliance requirements on anonymous venues.
with this model, a broker, bank or regulated exchange could KYC users off-chain, whitelist verified wallets and launch their own market on Hyperliquid, while Hyperliquid simply provides the execution and settlement infrastructure.
Hyperliquid stops being just another exchange.
it becomes infrastructure that other exchanges can build on.
this alone wonāt bring institutional money overnight. licensing, surveillance and regulatory obligations still exist.
but this removes one of the biggest architectural blockers.
if this is indeed the direction HIP-3 is taking, i think people are underestimating what Hyperliquid is trying to become.
not the biggest DEX.
the AWS of onchain exchanges.
new feature observed on hl testnet: stars
afaict stars let deloyers make a hip-3 dex address-allowlisted for trading. testnet allowlist size currently is max 10k addresses. non-allowlisted addresses can still submit reduce-only orders / fund accounts.
see ktob ("BTC Star DEX")
some relevant txs:
0x851e0bc62988fe9e8697042529220801080023abc48c1d7028e6b718e88cd889 (register ktob:BTC)
0x54c1a9c94451ac7e563b0425292214010100c1aedf54cb50f88a551c03558668 (activate star)
0x875b29d555ffdba188d4042529221c01030041baf0f2fa732b23d52814f3b58c (approve trader address)
0x9dbce81f1a86dc269f360425292224010c000004b589faf841859371d98ab611 (unhalt ktob:BTC)
0x3130533baff0a23a32aa0425292ce1010a006b214af3c10cd4f8fe8e6ef47c24 (unapproved address funded)
0x8923485ccfdea73b8a9d0425292d2c01010060426ad1c60d2cebf3af8ed28126 (unapproved address attempts to place order and fails)
0x326fcd720ba84bd833e90425292e06010400e557a6ab6aaad63878c4caac25c2 (approved trader address funded)
0xe070d0c9f5aca692e1ea0425292e33010300e8af90afc56484397c1cb4a0807d (approved trader address places order successfully)
can think of a few reasons why this might be useful, but will refrain from speculation for the time being.