Hyperliquid Community Advances DeFi with HIP-6 Continuous Clearing Auction Mechanism

• Hyperliquid’s HIP-6 proposal advances permissionless token launches via continuous clearing auctions for projects to raise funds and discover fair prices.
• The proposal makes Hyperliquid a protocol where users can can launch, price and trade tokens entirely onchain.

The Hyperliquid community is pushing a new improvement proposal that allows teams to raise money on-chain through continuous clearing auctions.

Known as HIP-6, the new proposal is built around HIP-1, which introduced permissionless token deployment and HIP-2, which offers automated liquidity, known in the ecosystem as Hyperliquidity. However, the network lacks a direct way to combine a price discovery mechanism and capital raising. Currently, teams raise money offchain, guess a fixed launch price onchain, or manually seed liquidity into thin books.

According to a breakdown by James Evans from Reciprocal Ventures, HIP-6 adapts the continuous clearing auction (CCA) feature from Uniswap, integrating it into Hyperliquid’s architecture which is designed around the network’s central limit order book (CLOB). Unlike Uniswap and its kind which use automated market makers, Hyperliquid is built on a fully onchain order book and matches orders onchain.

As CNF previously reported, Uniswap recently brought this feature into Arbitrum One for onchain token auctions.

CCA splits auctions across thousands of blocks, releasing tokens gradually per block and clearing each block at a uniform price. This avoids fixed-price sales, which could be too low and the project would lose the difference, or too high and the sale would fail. It also ends uncapped sales where a project kept raising funds beyond its target because there was no mechanism to stop it.

HIP-6 Expands Hyperliquid Beyond Trading

HIP-6 enables deployers to raise capital natively on Hyperliquid, seed liquidity automatically, enjoy fair-price discovery and cuts dependence on third parties. One of the tradeoffs is that they have less control over the price of their tokens at launch.

For bidders, HIP-6 gives uniform clearing price for each block, onchain custody and an advantage for those that participate early as their capital is distributed across more blocks. With the system being “monotonically non-decreasing,” which means the prices can only go up with each new block, early participants enjoy better capital distribution.

The entire ecosystem benefits from a 5% protocol fee on the total amount raised, which goes to the Assistance Fund that supports ecosystem growth and strengthens liquidity.

A big drawback for HIP-6 is deployer manipulation, where they can inflate the clearing price and reclaim any unsold token. To address this, the protocol has imposed a 5% fee and structured the system to permanently lock a percentage of the tokens for HIP-2 seeding. While manipulation is not impossible, it would be economically harmful.

Hyperliquid is already the most dominant derivatives exchanges in crypto for perpetual futures, processing a third of the sector’s $600 billion volume in January. However, its scope is narrow, and it loses out on billions of dollars that some of its peers process in fundraising events.

HIP-6 turns it from a purely trading venue to a protocol where users can launch, price and trade tokens entirely onchain.

HYPE trades at $28.13 , losing 2.3% in the past day for a $7.28 billion market cap.