Hyperliquid's HYPE token gained 24% Monday as silver perpetual futures trading volume exceeded $1.25 billion in 24 hours.
The commodity contract became the exchange's third most-active market behind Bitcoin and Ethereum.
Silver futures open interest on Hyperliquid reached $155 million as traders allocated capital to hard assets rather than cryptocurrency bets.
The shift occurred while Bitcoin traded sideways near $88,000 without clear directional momentum.
HYPE's price increase correlates directly with trading fee revenue. Hyperliquid channels approximately 97% of collected fees into automated token buybacks through its Assistance Fund.
How User-Created Markets Generate Buyback Demand
Hyperliquid launched permissionless perpetual futures markets in October 2024. Users can create commodity or equity contracts by locking HYPE tokens as collateral.
Market creators split trading fees 50-50 with the exchange. Hyperliquid's portion feeds the Assistance Fund which continuously purchases HYPE tokens from open markets then burns them.
Higher trading volumes directly increase buyback pressure. Silver's $1.25 billion daily turnover generated substantial fee revenue flowing into HYPE repurchases creating upward price momentum.
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Commodity Trading Expands Beyond Crypto Assets
Cryptocurrency derivatives exchanges have primarily focused on digital asset contracts. Hyperliquid's silver market demonstrates traders using blockchain infrastructure for traditional commodity exposure.
Gold futures also gained activity on the platform during the same period. Both precious metals recorded elevated volumes as macroeconomic uncertainty pushed capital toward tangible assets.
Jeff Yan, Hyperliquid CEO, stated the platform has become "the most liquid venue for crypto price discovery" though he provided no comparative metrics supporting this claim.
The exchange faces competition from established centralized platforms offering deeper commodity liquidity. Hyperliquid's non-custodial structure appeals to traders avoiding counterparty risk but execution quality remains untested during extreme volatility.
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