HCS Score
Red Line Violations
Research Opinion, Not a Fatwa
These are absolute prohibitions in Islamic finance. If any red line is triggered, the asset is automatically classified as HARAM.
Ecosystem Riba Exposure
Not directly or indirectly connected to interest generating mechanisms
Gambling / Betting
No gambling or betting mechanism
Haram Industry
Not involved in haram industry
Based on Red Line Screening and HCS Scoring.
Haram / Non Compliant
This cryptocurrency is evaluated as Haram for investment and use because the asset demonstrates material Sharia compliance concerns within the CoinStudy HCS framework.
Explanation
This asset shows significant concerns related to Sharia compliance, financial structure, or speculative design.
Reviewed by
CoinStudy Shariah Board
Hyperliquid is one of the most technically impressive and commercially successful platforms in decentralized finance. Processing over $633 billion in total trading volume in Q1 2026 per VanEck research, generating over $1.16 billion in cumulative revenue by May 2026 per KuCoin research, and reaching approximately $20.76 billion in market capitalization, it is not a peripheral project. It is a dominant and mature on-chain derivatives infrastructure.
For Muslim investors, technical excellence and commercial scale are not the question. The question is what Hyperliquid does and whether that activity is permissible under Islamic commercial law.
The Chairman of CoinStudy’s Shariah Board, Dr. Usman Quddus, PhD in Islamic Studies & Finance, has reviewed Hyperliquid and provided a ruling that is among the most jurisprudentially precise in CoinStudy’s analysis series. The verdict is Haram. Muslim investors should understand both the conclusion and the exact nature of the prohibition.
Hyperliquid fails two independent Layer 1 red-line checks under CoinStudy’s HCS methodology: Ecosystem Riba Exposure and Gambling and Betting. Either failure alone is sufficient to produce a Haram classification. No Layer 2 score is assigned.
Hyperliquid is a purpose-built Layer 1 blockchain launched in 2023. Its architecture consists of HyperCore, which operates the on-chain spot and perpetual futures order books, and HyperEVM, which supports Ethereum-compatible smart contracts. It was built by Hyperliquid Labs, a team that raised no external funding and allocated no tokens to venture capital or institutional investors prior to the community airdrop in November 2024. HIP-3, launched in October 2025, introduced permissionless perpetual markets allowing any asset to have a perpetual futures market deployed without platform approval.
HYPE is the native token of the Hyperliquid ecosystem. It functions as a governance token, the native gas token on HyperEVM per Hyperliquid’s documentation, and the primary beneficiary of the Assistance Fund, which routes approximately 99% of all trading fees to buy HYPE on the open market per CoinShares research and multiple sources including CryptoBriefing. Purchased HYPE is permanently burned, reducing total supply. Approximately 44.4 million HYPE have been purchased and burned to date per CoinShares. Additionally, under the Aligned Quote Asset (AQA) framework, the Assistance Fund also receives 90% of yield generated from USDC reserves held on Hyperliquid per CoinShares research.
The first US spot HYPE ETFs launched in May 2026 from Bitwise, 21Shares, and Grayscale per Amina Group research.
According to CoinMarketCap as of October 15, 2026, HYPE trades at approximately $82 with a market capitalization of approximately $20.76 billion and a circulating supply of approximately 253 million HYPE. The maximum supply is capped at 1 billion HYPE. Core contributors hold approximately 23.8% of total supply under a multi-year vesting schedule beginning November 2024, distributing approximately 1.2 million tokens per month starting January 6, 2026 per The Block.
Per DefiLlama, Hyperliquid’s gross protocol revenue was approximately $219.33 million in Q1 2026, approximately $204.04 million in Q2 2026, and approximately $298.69 million in Q4 2025. Hyperliquid processed over $633 billion in total trading volume in Q1 2026 per VanEck research. Perpetual futures accounted for approximately 90.9% of all fee revenue in Q1 2026 per the same source. Spot trading fees were approximately $5.51 million in Q1 2026 and approximately $5.64 million in Q2 2026 per DefiLlama. Hyperliquid grew from approximately 300,000 to 1.4 million cumulative wallets during 2025 per Hyperliquid’s own reported figures as cited by Coinspeaker. The Assistance Fund repurchased approximately $192.25 million worth of HYPE in Q1 2026 per KuCoin research.
CoinStudy’s Riba finding is grounded in the specific documented design of Hyperliquid’s funding formula.
Per Hyperliquid’s official funding documentation, the formula is:
Funding Rate (F) = Average Premium Index (P) + clamp (interest rate - P, -0.0005, 0.0005)
The interest-rate parameter is fixed at 0.01% per 8 hours, which Hyperliquid’s own documentation labels “interest rate component” and describes as “11.6% APR paid to short.” The actual funding rate also depends on the premium component and can become positive or negative, reversing the payment direction: when the perpetual trades above spot, longs pay shorts; when it trades below spot, shorts pay longs. CoinStudy’s concern is not that every position necessarily pays 11.6% APR to shorts. CoinStudy’s concern is that a fixed, explicitly labeled interest-rate parameter is embedded in every perpetual position’s contractual formula as a structural design feature, transferring periodically between counterparties based on an interest rate parameter rather than on productive economic services rendered.
The three-layer framework: the documented fact is that Hyperliquid’s own documentation uses the label “interest rate component” for a fixed parameter of 0.01%/8h embedded in every perpetual contract, as confirmed by Hyperliquid’s gitbook. CoinStudy’s methodological rule is that a labeled interest rate parameter contractually embedded in a financial product constitutes an Ecosystem Riba Exposure concern. CoinStudy’s framework-based conclusion is that this triggers the red line.
Muslim investors should be aware that the question of whether perpetual funding rates constitute Riba in the classical Islamic juristic sense is genuinely debated among scholars. Some scholars view the funding rate as a permissible price-alignment mechanism rather than Riba because it is peer-to-peer and can flow in either direction. Other scholars hold that the labeled interest rate component and the periodic transfer structure constitute a Riba concern. CoinStudy presents its finding as a framework-based conclusion and encourages Muslim investors to seek individual scholarly guidance.
Additionally, the Assistance Fund receives 90% of yield from USDC reserve management through repos and short-term Treasuries under the AQA framework per CoinShares, directing proceeds from interest-bearing instruments into the protocol’s primary HYPE buyback mechanism.
CoinStudy’s Maysir finding is grounded in the absence of genuine ownership and the absence of any productive economic exchange in the perpetual futures contract structure.
The Islamic juristic principle at the foundation of this analysis is that profit is justified through ownership of and risk-bearing in productive assets. A contract that derives its entire economic substance from price movement outcomes, with no transfer of real ownership at any point and no genuine commercial exchange between counterparties, falls outside the framework of permissible trade regardless of how technologically sophisticated its execution is.
Shaykh Muhammad Carr, a Shariah Board Member for Islamic Asset Management and Insurance Companies since 2001, has ruled directly on this question via SeekersGuidance: “Crypto perpetual contracts remain impermissible even if no interest is involved, the price tracks the underlying asset, and trades are executed with research, strategy, and risk management, because they do not involve actual ownership of the underlying asset.”
Hyperliquid’s perpetual contracts allow no delivery of the underlying asset at any point. Settlement is on price differences only. A trader holding a Bitcoin perpetual on Hyperliquid never owns, acquires, or holds any claim on Bitcoin itself. The contract’s sole economic substance is the exchange of money based on price prediction outcomes. The leverage structure amplifies exposure to the point where deposited margin can be eliminated through routine price movements. The contract exists to transfer money between counterparties based on who correctly predicted price direction, with no underlying productive economic relationship between them. This is the specific prohibited mechanism: not zero-sum economics by itself, but a contract that derives profit without genuine ownership of any productive asset.
The HLP (Hyperliquidity Provider) vault is a community-owned market-making and backstop liquidation vault. Per Hyperliquid’s official documentation and CoinGecko research, anyone holding USDC on Hyperliquid can deposit and share proportionally in HLP’s profit and loss.
HLP earns from three documented sources: market-making spreads across listed perpetuals, funding rate collection as a counterparty to perpetual positions in certain market conditions, and backstop liquidation proceeds when ordinary market liquidation cannot clear a position through the order book. HLP can also lose money: it lost approximately $4 million in a single whale liquidation event per The Block, and faces losses during volatile market conditions.
CoinStudy’s analysis: the HLP vault is part of the platform’s architecture for perpetual futures markets. Its funding rate collection source involves the same interest-rate parameter identified in the Riba analysis. Its backstop liquidation proceeds source raises a concern about a structure that earns from the process of trader liquidation. These reinforce the broader Haram classification of the platform.
One of HYPE’s major documented economic drivers is the Assistance Fund’s use of protocol revenue to purchase HYPE. Approximately 99% of Hyperliquid’s gross protocol revenue is routed to the Assistance Fund per CoinShares. Approximately 90.9% of gross protocol revenue in Q1 2026 came from perpetual futures fees per VanEck research. Based on this Q1 2026 revenue mix, perpetual futures fees accounted for an estimated 90% of the fee revenue flowing through the Assistance Fund in that period. CoinStudy considers this exposure material under its HCS methodology: a token whose major documented value driver is a mechanism that converts perpetual futures fees into open-market demand for that token has material financial exposure to the continuation of those prohibited activities.
A reasonable counterargument exists: HYPE token holders do not own protocol revenue directly and the Assistance Fund is a governance mechanism rather than a contractual dividend, which governance could in principle modify per Amina Group research. CoinStudy acknowledges this distinction. The HCS methodology asks whether the token’s primary economic architecture is permissible: under this framework, the material dependence of HYPE’s buyback mechanism on perpetual futures revenue is the relevant analytical question, not contractual ownership of revenue. This is CoinStudy’s framework-based conclusion rather than a universal determination. HYPE also has other functions including governance and use as the native gas token on HyperEVM per Hyperliquid’s documentation, and Muslim investors should seek individual scholarly guidance on the specific nature of these conclusions.
CoinStudy’s Chairman, Dr. Usman Quddus, PhD in Islamic Studies & Finance, reviewed the CoinStudy HCS analysis of Hyperliquid and provided the following direct ruling:
“The purpose of this coin in itself is trading, which provides a facility for trade on blockchain. So it cannot be called intrinsically Haram (Haram Lizatihi). However within its services and facilities there are factors and activities that are making it Haram due to external reasons (Haram Lighayrihi). From an Islamic perspective its use will remain prohibited until it eliminates these Haram Lighayrihi factors and activities.”
CoinStudy’s assessment of this ruling:
The Chairman introduces the distinction between Haram Lizatihi and Haram Lighayrihi, among the most precise analytical categories in classical Islamic jurisprudence.
Haram Lizatihi means prohibited by intrinsic nature. Alcohol is Haram Lizatihi. The substance itself is what is prohibited and no context can alter that.
Haram Lighayrihi means prohibited due to external factors rather than intrinsic nature. The thing itself is not categorically evil. Specific implementations or surrounding circumstances make it prohibited in its current form. If those external factors were genuinely removed, the prohibition could lift.
The Chairman places Hyperliquid in the second category. Hyperliquid’s purpose in itself is providing a facility for trade on blockchain, which is not intrinsically prohibited. A decentralized venue where parties can exchange assets has genuine legitimate commerce potential. The Chairman confirms this explicitly, which is why HYPE is classified as Haram Lighayrihi rather than Haram Lizatihi.
Applying the Chairman’s broader Haram Lighayrihi conclusion to the technical findings in this article, CoinStudy identifies three areas of concern as the Haram Lighayrihi factors making Hyperliquid prohibited in its current form: the perpetual futures funding rate mechanism with its embedded interest-rate parameter, leveraged speculation structured around price prediction without genuine ownership of the underlying asset, and the HLP vault’s role in earning from backstop liquidations of trader positions.
Muslim investors must not misread Haram Lighayrihi as a softer Haram. The Chairman’s conclusion is unambiguous: its use will remain prohibited until it eliminates these Haram Lighayrihi factors and activities. The practical ruling is Haram. The jurisprudential distinction matters because it explains the precise nature of the prohibition: Hyperliquid is not evil in itself, it has been implemented with specific prohibited elements as its core economic activities.
CoinStudy’s Haram classification is confirmed by and fully consistent with the Chairman’s ruling.
Ecosystem Riba Exposure: ❌ Failed under CoinStudy’s framework-based analysis. Documented fact: Hyperliquid’s funding formula includes a fixed interest-rate parameter of 0.01%/8h (approximately 11.6% APR when annualized), explicitly labeled “interest rate component” in Hyperliquid’s own documentation per hyperliquid.gitbook.io. The actual funding rate also depends on the premium component and can be positive or negative; CoinStudy’s concern is the labeled interest-rate parameter in the contractual formula, not a claim that every position pays this rate to shorts. CoinStudy’s methodological rule: a labeled interest rate parameter contractually embedded in a financial product constitutes an Ecosystem Riba Exposure concern. Framework-based conclusion: red line triggered. Scholarly debate acknowledged.
Gambling and Betting: ❌ Failed under CoinStudy’s framework-based analysis. Documented fact: Hyperliquid perpetual futures involve no delivery of the underlying asset, settle on price differences only, and derive their entire economic substance from price movement outcomes with no genuine ownership or productive exchange. CoinStudy’s methodological rule: a contract that derives profit without genuine ownership of productive assets, whose entire economic substance is price prediction outcome exchange, constitutes Maysir under the HCS framework. Consistent with Shaykh Muhammad Carr via SeekersGuidance: perpetual contracts remain impermissible because they involve no actual ownership. Framework-based conclusion: red line triggered.
Haram Industry: ✅ Passed. Blockchain infrastructure for trading is not inherently prohibited per the Chairman’s ruling.
Two red-line failures. No Layer 2 score assigned.
Overall Result: Haram ❌ — Red Line Violations
Hyperliquid’s decentralization is a genuine technical achievement. Decentralization is a governance and security property, not a Shariah compliance property. Whether perpetual futures involve Riba and Maysir has nothing to do with whether they occur on a centralized or decentralized platform. A prohibited activity performed through decentralized infrastructure remains prohibited.
The Chairman’s ruling is precise: use will remain prohibited until the Haram Lighayrihi factors are eliminated. Applying the Chairman’s conclusion to the technical findings, CoinStudy identifies those factors as the perpetual futures funding rate mechanism, the leveraged speculation structure without genuine ownership, and the HLP vault’s role in backstop liquidations. A platform that restructured to operate as a spot-only exchange for permissible assets, removed its leverage and perpetual futures product, and redesigned the HLP structure away from liquidation mechanics would require a fresh analysis and might potentially achieve permissibility. Given that perpetual futures represent approximately 90.9% of gross protocol revenue, such a restructuring would require a fundamental reimagination of the business. No such change has been announced as of October 2026.
Hyperliquid (HYPE) is classified as Haram under the CoinStudy Halal Crypto Standard.
Two Layer 1 red lines failed based on independently established findings with distinct Shariah pathways. The Riba finding is CoinStudy’s framework-based conclusion grounded in the documented labeled interest-rate parameter in the perpetual futures funding formula per Hyperliquid’s own documentation, with scholarly debate acknowledged. The Maysir finding is CoinStudy’s framework-based conclusion grounded in the perpetual contract’s absence of genuine ownership and productive exchange, consistent with scholarly opinion including Shaykh Muhammad Carr.
The Chairman of CoinStudy’s Shariah Board, Dr. Usman Quddus, PhD in Islamic Studies & Finance, has confirmed the ruling: Hyperliquid contains Haram Lighayrihi factors. Its use will remain prohibited until these factors are eliminated. The practical ruling is Haram. The Haram Lighayrihi classification explains the precise nature of the prohibition and preserves the theoretical path to permissibility should the identified factors be genuinely removed.
Muslim investors should not invest in HYPE in its current form. One of HYPE’s major documented economic drivers is the Assistance Fund’s buyback mechanism: based on Q1 2026 revenue data, an estimated 90% of fee revenue flowing through the Assistance Fund originated from perpetual futures fees. This is CoinStudy’s framework-based analysis and Muslim investors should seek individual scholarly guidance on questions about the specific nature of the Riba or Maysir conclusions.
Read detailed analysis and concepts here:
Is Crypto Futures Trading Halal?
Understanding Maysir in Crypto
Understanding Gharar in Crypto
Market Volatility vs Contractual Gharar
Disclaimer: This analysis is provided for educational and research purposes only based on guidance from CoinStudy’s HCS Shariah Board. The Haram classification reflects four Layer 1 red-line failures under CoinStudy’s HCS framework-based methodology. The Riba finding is presented as CoinStudy’s framework-based analysis of the documented interest-rate parameter rather than a universally settled scholarly determination: the question of whether perpetual funding rates constitute classical Riba is debated among scholars and Muslim investors should seek individual guidance. The Maysir finding is consistent with documented scholarly opinions including Shaykh Muhammad Carr via SeekersGuidance. The Chairman’s ruling classifies Hyperliquid as Haram Lighayrihi rather than Haram Lizatihi: the practical ruling is identical and use is prohibited in the current form. CoinStudy does not issue personal fatwas or financial advice. Please consult a qualified Islamic scholar for individual guidance.
Authoritative ruling from the Chairman of the CoinStudy Sharia Board.
"The purpose of this coin in itself is trading, which provides a facility for trade on blockchain. So it cannot be called intrinsically Haram (Haram Lizatihi). However within its services and facilities there are factors and activities that are making it Haram due to external reasons (Haram Lighayrihi). From an Islamic perspective its use will remain prohibited until it eliminates these Haram Lighayrihi factors and activities."
CoinStudy's assessment based on this ruling:
Dr. Usman Quddus's ruling on Hyperliquid introduces one of the most important distinctions in classical Islamic jurisprudence applied to a cryptocurrency for the first time in our analysis series. The chairman draws a precise line between Haram Lizatihi and Haram Lighayrihi, a distinction that carries significant implications for how Muslim investors understand compliance classifications.
Haram Lizatihi means prohibited by its own intrinsic nature. Alcohol is Haram Lizatihi. Pork is Haram Lizatihi. The substance or activity itself is what is prohibited regardless of how it is used or what surrounds it. No context, intention, or circumstance can make it permissible.
Haram Lighayrihi means prohibited due to external factors rather than intrinsic nature. The thing itself is not inherently prohibited but specific circumstances, uses, or associated elements make it prohibited. Theoretically if those external factors were removed, the thing could return to permissibility. The chairman places Hyperliquid in this second category.
The chairman's reasoning is precise. Hyperliquid's purpose in itself is facilitating trade on blockchain. Blockchain-based trading infrastructure is not intrinsically prohibited. The concept of a decentralized exchange where parties can trade assets directly with each other has genuine legitimate commerce potential. This is why the chairman cannot call it Haram Lizatihi.
However Hyperliquid's actual implementation introduces specific features that constitute the Haram Lighayrihi factors. The perpetual futures contracts charge funding rates that transfer payments periodically between long and short position holders, functioning as Riba-adjacent mechanisms. The leveraged speculation mechanic allows positions of up to 50 times the deposited margin, creating a zero-sum market where one trader's profit is mathematically another's loss with no productive economic activity underlying the transaction. This is the precise structure Islamic finance identifies as Maysir. The HLP vault earns from the losses of losing traders on the platform, a revenue model built entirely on zero-sum financial extraction.
The chairman's conclusion carries no ambiguity despite the nuanced jurisprudential framing. Its use will remain prohibited until it eliminates these Haram Lighayrihi factors and activities. The practical ruling is Haram. The scholarly nuance explains why it is Haram in a way that provides a theoretical path to permissibility if the prohibited features were removed, which they have not been and show no sign of being removed given that perpetual futures are Hyperliquid's core product and primary revenue source.
Muslim investors should not interpret the Haram Lighayrihi classification as a softer or less serious Haram ruling. The practical ruling is identical: Hyperliquid is prohibited for Muslim investors in its current form. The distinction matters for understanding the nature of the prohibition and for monitoring whether future changes to the platform might alter the compliance picture, not for finding any current permissibility within the platform as it exists today.
CoinStudy's Haram classification is confirmed by and fully consistent with the chairman's ruling.
Guaranteed Interest
No guaranteed interest obligations
Synthetic Interest Products
No synthetic interest instruments
4 Red Lines Failed
This asset is automatically classified as HARAM.
Is Ethena USDe halal?
USDE · HCS 0 · Haram
