Hyperliquid Announces Payward’s Plans for Regulated HIP-3 Market
In a recent announcement, Hyperliquid disclosed Payward’s intentions of launching a regulated HIP-3 market in the US, with the aim to provide on-chain perpetual futures via Bitnomial, pending regulatory clearance from the Commodity Futures Trading Commission (CFTC). On October 26, Hyperliquid stated that Bitnomial will be responsible for establishing, owning, and managing these new markets, while also taking care of the clearing and settlement processes. Should the CFTC give the green light, NinjaTrader Clearing—considered a futures commission merchant registered with the CFTC—will manage customer accounts under this framework.
Project Overview and Market Access
Payward originally revealed this project on September 16 and selected Hyperliquid as the foundational protocol to facilitate US-based on-chain perpetual futures. The structural outline includes an account setup that mandates customers to complete their onboarding through NinjaTrader, and to be listed on both NinjaTrader and Bitnomial’s allowlists to access the market products.
Per the details shared in September, trades will be executed and documented using Hyperliquid’s public blockchain through its on-chain order book. The contracts are set to abide by the operational guidelines outlined by the Bitnomial Exchange, which will also bear the regulatory responsibilities associated with the transaction mechanisms, clearing activities, and brokerage services.
Operational Aspects of HIP-3
Further elaborating on the operational aspects, Hyperliquid introduced the concept of HIP-3 in its October 26 communication. This new layer will encompass on-chain allowlisting, which deployers or designated sub-deployers will manage for accessing the markets. Currently, an initial version is rolling out on the testnet, allowing for adaptation based on user feedback, with significant changes expected in future network updates.
HIP-3 is intended as an optional feature, preserving existing market functionalities while empowering deployers with the choice to leverage this new capability. Hyperliquid emphasizes that independent operators will maintain authority over their market operations, utilizing Hyperliquid’s blockchain technology as the infrastructure backbone.
Historical Context and Future Developments
Historically, on September 3, a prior testing phase on permissioned markets was discussed by Hyperliquid’s co-founder, Jeffrey Yan, detailing how operators could curate participant lists without burdening the core development team with access decisions. Hyperliquid’s documentation for HIP-3 establishes essential parameters like market definitions, contract specifics, and leverage limits under the purview of the deployers.
In addition, any perpetual contracts deployed by builders would function with HyperCore’s margining system. The documentation specifies a minimum staking requirement of 500,000 HYPE in the mainnet, necessary for at least 183 days after deployment; however, specifics for Payward’s markets are not delineated in the latest post.
Settlement Procedures and Payward’s Acquisition of Bitnomial
The settlement procedure outlined allows deployers to cease trading on an asset, annul existing orders, and liquidate positions at the prevailing market rate. Trading can resume once all positions are accounted for, after which the deployer’s stake can also be released.
In May, Payward finalized its acquisition of Bitnomial, which augmented its operational capabilities in the US derivatives market by integrating aspects of exchange, clearing, and brokerage services. The acquisition was reported to possibly be worth up to $550 million in total, though exact figures were not publicly confirmed at the time of closure. Following the acquisition, Payward co-CEO Arjun Sethi indicated that the firm’s product rollout would initiate with spot margin trading via Kraken, later expanding into perpetual contracts and options.
Future Infrastructure and Regulatory Compliance
With a focus on integration, Payward plans to extend its infrastructure across Kraken, NinjaTrader, and Payward Services, allowing transactional offerings for banks and fintech companies under regulatory compliance. Previously, in 2019, Payward had acquired a UK-licensed crypto futures platform and is set to roll out an EU-regulated derivatives service by 2025.
Bitnomial achieved designation as a contract market by the CFTC in April 2020, which necessitated adherence to the Commodity Exchange Act and associated regulations. Additionally, on October 20, the Hyperliquid Policy Center submitted a request to the CFTC for US futures and perpetual contracts linked to GPU rental pricing and AI inference costs. This proposal, endorsed by CEO Jake Chervinsky, argued for protections including limits on leverage and funding rates to ensure transparency in pricing, strategically addressing the financial exposures faced by data center operators and AI developers.
