The Protocol: Hyperliquid Introduces Proposal to Cut Fees

Welcome to The Protocol, CoinDesk's weekly wrap of the most important stories in cryptocurrency tech development. I’m Margaux Nijkerk, a reporter at CoinDesk.

In this issue:

• Hyperliquid Unveils HIP-3 Growth Mode, Slashing Fees by 90% to Boost New Markets
• Leading Base DEX Aerodrome Merges Into Aero in Major Overhaul
• Cloudflare Outage Sends Shockwaves Through Crypto, Renewing Push for DePIN
• DYdX Governance Approves Buyback Increase to 75% of Protocol Revenue

Network News

HYPERLIQUID INTRODUCES HIP-3 PROPOSAL: On-chain decentralized exchange Hyperliquid introduced a feature that lets anyone permissionlessly deploy new markets at ultra-low fees in a bid to boost liquidity to incentivize new market makers. The upgrade, called HIP-3 growth mode, slashes all-in taker fees by over 90% for newly launched markets, and can be activated on a per-asset basis by deployers, permissionlessly and without centralized gatekeeping. Under the upgrade, all-in taker fees plummet from the usual 0.045% to as low as 0.0045%-0.009%. At top staking and volume tiers, fees can shrink even further, reaching a shoestring 0.00144%-0.00288%, according to an official post. The upgrade essentially lowers barriers to entry and trading costs with an aim to deepen liquidity and broaden asset offerings on Hyperliquid, strengthening its position as a competitor to centralized avenues.Taker fees are charges collected from traders who remove liquidity from the market by executing orders that immediately match existing orders on the order book. To qualify, deployers must set their fee scale – the portion of user trading fees they retain before any discounts, such as those from aligned stablecoin collateral – between 0 and 1. In addition, growth mode markets must avoid overlap with any existing validator-operated perpetuals, preventing “parasitic” volume, and must be distinct assets. Examples excluded are crypto perpetuals, crypto indexes, ETFs and assets closely tracking existing markets like the PAXG-USDC gold perp. The growth mode, once switched on for an asset, locks for 30 days before changes can be made, ensuring market stability. The announcement has spurred excitement on crypto social media, with users calling the growth mode "insanely bullish." — Omkar Godbole Read more.

AERODROME TO PURSUE MAJOR OVERHAUL: Dromos Labs, the core developer behind decentralized exchanges (DEX) Aerodrome on Base and Velodrome on Optimism, announced a major overhaul of its decentralized exchange infrastructure with the launch of Aero, a unified trading system that will replace and merge its existing platforms across both networks, as well as expand to other Ethereum chains. Aerodrome is the leading exchange on Base by volume and fees, and with Aero’s expansion to the Ethereum mainnet in the second quarter of 2026, as well as Circle’s Arc, Dromos Labs aims to position the platform as a central liquidity hub for the broader ecosystem. Aero, which is set to bring faster and cheaper fees onchain, will focus on Base as its central hub, while extending liquidity and trading capabilities to other chains. “Just as the world came online, it is now coming onchain. Aero is at the vanguard of a financial system better, faster, and cheaper than the incumbent,” said Alexander Cutler, the CEO of Dromos Labs. — Margaux Nijkerk Read more.

CLOUDFLARE OUTAGE RENEWS DECENTRALIZATION PUSH: Cloudflare experienced a major outage that cascaded into widespread service disruptions across thousands of websites and applications. Several large centralized crypto services rely on Cloudflare to help with heavy traffic. BitMEX faced an outage and there was also significant downtime for Telegram-linked blockchain Toncoin. But the outage spread beyond crypto, with platforms like X and ChatGPT also going down, affecting millions of people. The episode came just weeks after Amazon Web Services (AWS) had an outage that took down access to major blockchains like Coinbase’s Base chain as well as Infura which powers a lot of blockchains. The outage reignited the conversation around needing to decentralize infrastructure to keep the internet running. Some in the crypto world have called for DePIN to be more widely adopted to combat such issues. DePIN, or Decentralized Physical Infrastructure Networks, uses blockchain incentives to coordinate and reward people for building and maintaining real-world infrastructure. This can be anything from wireless networks to sensors to energy systems; the purpose is to not rely on a central company. Users thus contribute hardware or services and earn tokens in return, creating an open, community-run infrastructure layer. — Margaux Nijkerk Read more.

DYDX GOVERNANCE APPROVES BUYBACK INCREASE: The dYdX community voted in favor of an updated buy-back program on its governance forum. Under earlier governance, 25 % of net protocol revenue was allocated to repurchasing DYDX on the open market and then staking the tokens. The new proposal #313, which 59.38% of the community approved, charts a course to raise the buy-back allocation to 75% of net protocol fees. This marks a shift in how protocol revenue is distributed and indicates the community’s intention to tie token-economic incentives more directly to platform performance. In addition to the 75%, protocol revenue sharing will include 5% going to Treasury SubDAO, and 5% to the MegaVault. DYdX had already launched a buy-back program in March 2025 and token emissions were scheduled to decline in June. The increased allocation is therefore part of a broader tokenomics refinement aimed at tightening circulating supply and enhancing network security. – Margaux Nijkerk Read more.

In Other News

• BlackRock's spot bitcoin ETF, IBIT, recorded its largest one-day outflow since the start of trading in January 2024 during a month already marked by record November outflows, according to Farside data. The ETF notched $523.2 million in net withdrawals on Tuesday, even though its price rose more than 1% as bitcoin advanced above $93,000. Franklin Templeton's ETF, EZBC, and Grayscale's Bitcoin Mini Trust, BTC, brought in $10.8 million and $139.6 million in inflows, respectively. Still, in total the exchange traded funds saw a net outflow of $372.8 million in a fifth straight trading day of net redemptions. November has produced only three days of net inflows and bitcoin is trading near $90,000, down roughly 30% from its October all time high. Total net inflows since launch now stand at $58.2 billion. — James Van Straten Read more.
• Crypto exchange Kraken raised $800 million in fresh funding, including $200 in an investment from Citadel Securities, to accelerate its efforts to bring traditional financial markets onto blockchain infrastructure, the company said. The round was split across two tranches, with the main one led by institutional investors including Jane Street, DRW Venture Capital, HSG, Oppenheimer Alternative Investment Management and Tribe Capital. A follow-on $200 million investment came from market-making giant Citadel Securities, valuing Kraken at $20 billion. Kraken, founded in 2011, operates a regulated trading platform offering spot and derivatives markets, tokenized assets, staking, and payment services. Its infrastructure is vertically integrated — covering custody, clearing, matching, settlement and wallet services — which allows the company to roll out new financial products quickly while maintaining compliance standards. — Helene Braun Read more.

Regulatory and Policy

• U.S. senators are in close negotiations on the language to set up regulated crypto markets, and while they debate the details, Senator Elizabeth Warren is seeking to continue illuminating President Donald Trump's personal crypto ties. The Massachusetts lawmaker, who is the ranking Democrat on the Senate Banking Committee, and a frequent ally, Senator Jack Reed, sent a letter to Treasury Secretary Scott Bessent and Attorney General Pam Bondi requesting information on reports that Trump-linked World Liberty Financial Inc. sold tokens to "North Korea, Russia and other illicit actors." Warren and some other Democrats in both the Senate and House of Representatives have targeted the president's business connections with WLFI, saying they pose a significant conflict of interest as his administration seeks crypto-friendly policies that will directly benefit Trump's financial interests. — Jesse Hamilton Read more.
• Canada's government managed to pass its federal budget in parliament that would — among many other things — institute a stablecoin policy. Parliament narrowly passed Prime Minister Mark Carney's first budget earlier this week. Deep in the lengthy document is a section that would govern the issuance of stablecoins, overseen by the Bank of Canada. There remain other procedural hurdles for the budget's specific provisions, but this marked a major win for the new government. In an echo of many of the points from the recent U.S. law regulating issuers of U.S. dollar-backed stablecoins, issuers in Canada must maintain one-to-one reserves "composed exclusively of the reference currency or other high-quality liquid assets," allow immediate redemptions and meet a suite of requirements on risk management, cybersecurity, disclosures and management in times of failure. The Bank of Canada will supervise and maintain the registry of approved applicants. — Jesse Hamilton Read more.

Calendar

• Nov. 17-22: Devconnect, Buenos Aires
• Dec. 11-13: Solana Breakpoint, Abu Dhabi
• Feb. 10-12, 2026: Consensus, Hong Kong
• Feb. 17-21, 2026: EthDenver, Denver
• Mar. 30-Apr. 2, 2026: EthCC, Cannes
• Apr.15-16, 2026: Paris Blockchain Week, Paris
• May 5-7, 2026: Consensus, Miami