Hyperliquid has surfaced as crypto’s derivatives darling since it debuted in 2023, but the honeymoon may not last forever, according to BitMEX co-founder Arthur Hayes.

Although the decentralized upstart’s surging popularity has helped spur its native token to recent all-time highs, the outspoken Hayes told Decrypt in an interview that looming competition from Wall Street and established crypto players threatens to erode one of the digital asset’s core drivers.

Hyperliquid relies on a steady stream of trading fees to buy its token off the open market and permanently remove it from circulation—a mechanism designed to bolster scarcity, that Hayes warned, leaves the protocol uniquely exposed to any sudden loss in market…