Governance

HyperLiquid has an on-chain governance system with proposals, voting, and global parameter changes. Governance operates through the staking and validator system, with all state stored directly on L1.

Proposal system

Governance proposals follow a propose-then-vote pattern:

GovProposeAction:
  multiSigUser  -- the proposer (multi-sig user)
  outerSigner   -- the signing identity
  action        -- the proposed action

GovVoteAction:
  id      -- proposal ID
  choice  -- vote choice
  nonce   -- replay protection

Each proposal has a ProposalCategory that determines its scope and quorum requirements. Active proposals are stored in the staking state’s proposals field.

Staking state

The staking state is the central governance container. It holds all validator, delegation, and governance data:

Field	Purpose
`proposals`	Active governance proposals
`stakes`	Validator stake amounts
`jailed_signers`	Currently jailed validator signers
`jail_vote_tracker`	Tracks jailing votes per validator
`jail_until`	Jail expiry timestamps
`native_token_reserve`	HYPE token reserve for rewards
`validator_to_staged_rewards`	Pending rewards per validator
`pending_withdrawals`	Pending stake withdrawals
`self_delegation_requirement`	Minimum self-delegation
`disabled_validators`	Disabled validator set
`validator_to_state`	Per-validator state map
`version`	State version

Each validator also carries per-validator state:

profile              -- validator profile/metadata
initial_wei          -- initial stake amount
disable_delegations  -- flag to disable incoming delegations

Vote mechanics

HyperLiquid uses a generic VoteTracker system for stake-weighted voting across all governance decisions:

VoteTracker:
  stakes                    -- stake-weighted votes
  validator_to_value        -- each validator's current vote
  median_value              -- current median of votes
  update_median_bucket_guard -- timing for median recalculation
  num, denom, decay         -- decay parameters for vote weighting

Voting power is determined by VoteWeight, which maps directly to staked amounts. This same tracker mechanism is used for governance proposals, parameter changes, jailing votes, and app hash consensus.

App hash consensus

Validators also vote on application state hashes to ensure all nodes agree on the current state:

AppHashVoteTracker        -- tracks app hash agreement
quorum_app_hashes         -- confirmed quorum app hashes
highest_quorum_height     -- highest block with quorum agreement
quorum_app_hash_mismatch  -- detected mismatches (fresh, stale, missing, incorrect)

Global parameter changes

Validators can modify global protocol parameters through two mechanisms:

SetGlobalAction

Direct parameter updates, typically for price feeds:

SetGlobalAction:
  pxs              -- price data
  externalPerpPxs  -- external perp prices
  usdtUsdcPx       -- USDT/USDC price

SetGlobal actions can be delayed (delayed flag) for safety, executing at a future block height.

VoteGlobalAction

Stake-weighted voting on protocol changes. Categories include:

Category	Description
`VaultModification`	Vault parameter changes
`GossipPriorityGasAuctionChange`	Gas auction configuration
`SetUsdcEvmContract`	USDC EVM contract address
`RegisterAssetRequest`	New asset registration
`SetHip3BackstopLiquidatorParams`	Backstop liquidator config
`DeployGasAuctionChange`	Deployment gas auction lifecycle
`SetReserveAccumulator`	Lending reserve accumulator

Validator registration and management

New validators register via RegisterValidatorAction. Once registered, validators can perform various operations through ValidatorAction, including scheduling cancellations, setting display names, and voting on global parameters. Validators can be disabled for specific order types:

ValidatorDisabled variants:
  Alo              -- disabled for add-liquidity-only orders
  Ioc              -- disabled for immediate-or-cancel
  Gtc              -- disabled for good-till-cancel
  FrontendMarket   -- disabled for frontend market orders
  LiquidationMarket -- disabled for liquidation market orders

Jailing system

Validators are jailed for misbehavior, primarily missed heartbeats or consensus failures.

Jailing flow

Misbehavior detected

A validator misses heartbeats or disconnects from the network. The HeartbeatJailingConfig defines the thresholds.

Votes accumulate

Other validators vote to jail the offending validator. Votes accumulate in jail_vote_tracker.

Threshold reached

Once jail_threshold is reached (sufficient stake-weighted votes), the validator is jailed until the jail_until timestamp.

Unjailing

After the jail period expires, the validator can self-unjail via the unjailSelf action. The signer_to_last_manual_unjail_time field prevents rapid re-unjailing.

Jailing state

jailed_signers                     -- set of jailed validator signers
jail_vote_tracker                  -- votes to jail each validator
jail_until                         -- expiry time per jail
jail_threshold                     -- stake threshold to trigger jailing
signer_to_last_manual_unjail_time  -- cooldown after manual unjail

HeartbeatJailingConfig             -- heartbeat-based jailing parameters
heartbeat_tracker                  -- tracks heartbeat status
validators_missing_heartbeat       -- validators that missed heartbeats
disconnected_validators            -- validators that disconnected

Jailing includes a latency EMA (exponential moving average) component. Validators with consistently high latency can be jailed even if they are technically producing heartbeats, as the system tracks response quality, not just liveness.

Delegation system

Token holders can delegate stake to validators. Delegation uses an epoch-based system where changes take effect at epoch boundaries.

Delegation state

Delegation:
  initialUsd  -- initial delegation amount in USD

EpochDelegation:
  effective          -- effective delegation for current epoch
  target             -- target delegation (pending changes)
  validator_to_stake -- per-validator stake map

Validator delegation config

Each validator controls their delegation parameters:

Field	Purpose
`cold_user`	Cold wallet for delegation
`commission_bps`	Commission in basis points
`delegations_blocked`	Flag to block new delegations
`delegations_disabled`	Flag to fully disable delegations
`register_time`	When the validator registered
`last_signer_change_time`	Last signer key rotation
`disable_delegations`	Per-validator delegation toggle

Global delegation tracking:

user_to_delegations              -- maps users to their delegations
total_delegated                  -- total delegated across all validators
delegator_to_epoch_delegation    -- per-delegator epoch tracking

Reward distribution

Rewards are distributed from the native HYPE token reserve using a two-phase process:

Staging

Rewards are accumulated into validator_to_staged_rewards. The stage_reward_bucket_guard controls timing of this phase.

Distribution

Staged rewards are distributed to validators and their delegators. The distribute_reward_bucket_guard controls timing.

native_token_reserve            -- HYPE token reserve for rewards
validator_to_staged_rewards     -- pending rewards per validator
stage_reward_bucket_guard       -- rate limiter for staging
distribute_reward_bucket_guard  -- rate limiter for distribution

Rewards come from the native_token_reserve, which is the protocol’s HYPE allocation for validator incentives.

Stake discount tiers

Staking provides trading fee discounts based on tier thresholds:

StakeDiscountTiers:
  stake_discount_tiers        -- tier definitions (stake amount -> discount %)
  weigh_spot_volume_double    -- spot volume weighting factor
  aligned_quote_token_config  -- per-token configuration

Higher stake amounts unlock progressively better fee discounts. The weigh_spot_volume_double field gives additional weight to spot trading volume when calculating tier eligibility.

Validator economics

Staking requirements

Validators must meet minimum self-delegation requirements to participate in consensus. The self_delegation_requirement field in the staking state defines this threshold. Self-delegated stake has a 1-year lock period, ensuring long-term alignment.

Unstaking

Stake withdrawals enter a 7-day unstaking queue via pending_withdrawals. During this period, the stake continues to count toward security but the validator cannot access the funds.

Reward formula

Validator rewards come from the native_token_reserve (HYPE allocation). The reward rate is inversely proportional to the square root of total HYPE staked:

reward_rate ∝ 1 / √(total_staked)

This creates a natural equilibrium: as more HYPE is staked, the per-token yield decreases, discouraging excessive concentration while maintaining sufficient security incentives.

Commission

Validators set their commission rate via commission_bps (basis points). Commission is taken from delegator rewards before distribution. Validators can also:

Block new delegations (delegations_blocked)
Fully disable delegations (delegations_disabled)
Rotate their signer key (last_signer_change_time tracks this)

Revenue streams

Validators earn from multiple sources:

Block rewards — from the native token reserve
Commission — percentage of delegator rewards
Fee share — portion of trading fees

The two-phase reward system (staging then distribution) ensures atomic, consistent payouts across the validator set.

Delayed actions

Governance actions can be delayed for safety. This provides a window for validators to review and potentially cancel dangerous parameter changes before they take effect.

delayed_actions             -- queue of delayed actions
user_to_n_delayed_actions   -- per-user count
n_total_delayed_actions     -- global count
max_n_delayed_actions       -- maximum allowed
delayedUntil                -- block height at which action executes
ActionDelayerStatus         -- current delayer status
delay_scale                 -- scaling factor for delays

Signal Research

Protocol Research

DeFi Infrastructure

Infrastructure

Proposal system

Staking state

Vote mechanics

App hash consensus

Global parameter changes

SetGlobalAction

VoteGlobalAction

Validator registration and management

Jailing system

Jailing flow

Jailing state

Delegation system

Delegation state

Validator delegation config

Reward distribution

Stake discount tiers

Validator economics

Staking requirements

Unstaking

Reward formula

Commission

Revenue streams

Delayed actions

​Proposal system

​Staking state

​Vote mechanics

​App hash consensus

​Global parameter changes

​SetGlobalAction

​VoteGlobalAction

​Validator registration and management

​Jailing system

​Jailing flow

​Jailing state

​Delegation system

​Delegation state

​Validator delegation config

​Reward distribution

​Stake discount tiers

​Validator economics

​Staking requirements

​Unstaking

​Reward formula

​Commission

​Revenue streams

​Delayed actions

Proposal system

Staking state

Vote mechanics

App hash consensus

Global parameter changes

SetGlobalAction

VoteGlobalAction

Validator registration and management

Jailing system

Jailing flow

Jailing state

Delegation system

Delegation state

Validator delegation config

Reward distribution

Stake discount tiers

Validator economics

Staking requirements

Unstaking

Reward formula

Commission

Revenue streams

Delayed actions