Welcome to the Hyperion DeFi 2026 third quarter earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note, this conference is being recorded. I would now like to turn the conference over to Jason Assad, Director of Investor Relations. Thank you. Please go ahead.
Good morning, and welcome to Hyperion DeFi's 2026 third quarter earnings call. Joining me today are CEO Hyunsu Jung and CFO David Knox. Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. During this call, we may use words like anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions, which indicate forward-looking statements.
For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC, available on sec.gov and the IR section of our website at hyperiondefi.com. We will also reference certain non-GAAP financial measures today. Please refer to our earnings release and earnings supplement on our website for a full reconciliation of these non-GAAP measures to the most comparable GAAP measures. We'll start this morning's call with prepared remarks from Hyunsu and David, followed by Q&A. I'll now turn the call over to our CEO, Hyunsu Jung.
Thank you, Jason, and welcome all to Hyperion DeFi's third quarter 2026 earnings call. I'm excited to share what we accomplished in Q3, which resulted in the best quarter to date under our new operating strategy. The past three months were focused on continued execution and optimization across our operating structure.
We continue to lead the space at putting our balance sheet to work, and as a result, are proud to share our highest income quarter to date, with growth in core business lines supported by a diverse set of recently launched strategies that began contributing to revenues in the third quarter. We saw our largest multiple in HYPE staking rewards to date, earning around 3.6 times the base staking rate of HYPE, while continuing to establish diversified sources of revenue on-chain.
From my seat at the crossroads of traditional finance and crypto, I see our operating model as the institutional gateway to Hyperliquid continuing to ramp, supported by increasing demand across our various products and services. Our strategy and execution remain consistent. We accumulate a productive strategic asset and build financial infrastructure around it. A critical differentiator is how our economic participation in the Hyperliquid ecosystem facilitates the scaling of diversified revenue streams while directly supporting the network's growth.
In flywheel fashion, this allows further value creation and return, seen in our operating earnings and disciplined capital allocation. As we go over execution in Q3 and touch on real-time developments in Q4, we want to highlight our standalone positioning, unique value proposition, and best-in-class business model. To start, an update on the state of Hyperliquid.
Through 2026, Hyperliquid continued to grab headlines, with coverage from major financial media firms such as the Wall Street Journal and Bloomberg, as Hyperliquid's HIP-3 markets allowed for market participation on-chain 24/7, while traditional markets were closed. We saw the most substantial impact of that on Saturday, February 28, when the first aerial strikes were launched against Iran. Every commodities exchange in the world was closed, except for Hyperliquid.
Thus, market participants were able to participate in global price discovery for one of the most critical commodities on Earth, all on a blockchain-native exchange. Hyperliquid's position as a trusted global reference for asset pricing only accelerated over the summer, with the pre-IPO trading of assets such as Cerebras, SpaceX, and CXMT. Repeatedly, Hyperliquid proved that a neutral permissionless market could accurately enable price discovery while granting users globally the ability to participate in trading these assets.
In September, Hyperliquid was directly highlighted by the President of the U.S. regarding the CFTC and SEC's joint efforts to bring Hyperliquid to the United States. In parallel, Hyperliquid Labs had already released information regarding HIP-3*, a permissioned instance of the same infrastructure that already powers Hyperliquid's immensely successful permissionless perpetuals platform.
Shortly after, Payward, the parent company of Kraken, announced its intention to be the first CFTC-regulated deployer on HIP-3* markets. Subject to regulatory approval, Bitnomial, Payward's CFTC-regulated DCM and DCO would act as the HIP-3* deployer, creating, owning, and administrating the markets, and clearing and settling the contracts. If approved, NinjaTrader Clearing, Payward's CFTC-registered FCM, would carry client accounts. Payward's fully licensed approach would be the first of its kind to access decentralized blockchain infrastructure in this form, and it would be the first of many.
Most recently, ICE, or the Intercontinental Exchange, announced a partnership with trade.xyz to develop a path towards regulated access to Hyperliquid for U.S.-based users. In the span of just one week, regulated financial institutions were signaling to the market just how valuable Hyperliquid would be to the future of finance. At Hyperion, we believe that a rising tide lifts all boats.
Having supported Entropy's successful permissionless deployment of HIP-3, and now seeing additional institutional players coming to use Hyperliquid's infrastructure, both our product market fit, as well as our broader thesis on Hyperliquid becoming the unified layer for on-chain finance, continues to be validated. As this shift to on-chain finance accelerates, we continue to work diligently and position for continued institutional participation in the Hyperliquid ecosystem.
As a result of that focused work, we saw 112% growth in DeFi monetization this quarter, as revenues began to come in from new house deals, following the reallocation of HYPE to new deployments in the ecosystem. Our deal with Entropy supported HIP-3 perpetual futures markets, which has seen stellar growth over the past three months, with over $3 billion in volume traded and daily open interest above $80 million.
Pre-IPO trading for Anthropic has been the most successful market, and a testament to their unique market design methodology for enabling the asset to trade prior to Anthropic's upcoming IPO. They currently maintain the second-largest share of Hyperliquid's HIP-3 markets, and we expect them to release additional updates over the coming months that enhance the accessibility of their markets.
On HIP-4, the Skew team has put their market's RFQ into production, incorporating feedback from the Hyperliquid team that improves capital efficiency for market makers on their platform, and also enables multi-leg orders for options and parlays. We expect this to simplify participation in outcome markets on Hyperliquid, and this comes as Polymarket has recently launched five-minute markets for BTC, ETH, and other digital assets.
We operate with the same thesis we had for Hyperliquid as additional venues began to offer perps. The pie will only get bigger. With the core product developed and positioned to scale after initial testing, the Skew team will shift to focus on go-to-market. The team held previous roles at Moonshot, which served over three million daily active users at its peak in January 2025, as well as Liquid, another consumer-facing application originally built for Hyperliquid and currently has around 80,000 daily active users.
While we believe that shorter timeframe binary and scalar markets for digitals will continue to grow as both a speculative and hedging instrument, we recognize that the largest prediction market, sports, still remains unsolved on Hyperliquid, despite the fact that there are multiple advantages for deployers, such as a substantially cheaper cost, faster settlement, and ability to use RFQs to optimize liquidity.
With that and other opportunities in mind, we continue to have conversations in parallel with various teams looking to deploy new outcomes via our partner markets, as well as agreements to expand distribution channels for these markets, using RFQ as the entry point. We are optimistic in our ability to support that creation and optimization of new outcome markets that take advantage of the unique infrastructure benefits only available on Hyperliquid.
This quarter, we saw a substantial gain in income attributed to ecosystem rewards, which is Hyperion's unique way of structuring deals that ensure we capture upside value of our counterparties within our engagement. Although they remain variable, we see a trend of growth as counterparties recognize that this is a key part of our deal-making structure as Hyperion continues to position ourselves as the institutional gateway to Hyperliquid.
In this quarter, we acquired 10 million 2Z tokens as part of supporting DoubleZero's Hyperliquid data feeds provided on our existing validator infrastructure. We noted in our last earnings call that we were exploring such opportunities to generate income by building on our existing infrastructure, and now we've made that a reality.
Not only do the market data feeds synergize well with our existing product suite, but the accumulation of other assets on our balance sheet through our unique product design and engagement strategy provides flexibility on how we could continue to optimize our capital structure without having to rely solely on cash or HYPE. With that in mind, we also announced at the end of September that Hyperion DeFi will be serving as a launch partner for D3's Frontier Vaults, which was deployed on Hyperliquid.
In this model, Hyperion and other HYPE holders can deposit HYPE into the Frontier Vaults, which route HYPE to the Kinetiq x Hyperion validator for base staking rewards. By staking HYPE into this vault, depositors are able to earn DOMA points on top of base HYPE staking rewards. These DOMA points will provide priority access to the next wave of internet domains.
As a large HYPE holder and participant in D3's initiative, we expect to be able to participate in the economic upside of the internet domain asset class as available domains grow by Q4 of next year, while continuing to compound our HYPE position. Separately, we will be able to earn a DOMA position after the token generation event occurs, which is currently targeted for early next year.
We continue to receive inbounds from new teams looking to participate or migrate products to the Hyperliquid ecosystem and remain selective, choosing to work with teams that allow us to strategically expand our suite of products and services and benefit the Hyperliquid ecosystem longer term. In addition to developing new partnerships, we've continued to make progress in integrating our partner protocols with other platforms.
Take, for instance, Aave's integration with Anchorage Digital Bank in September, which now allows for natively staked HYPE to be directly utilized as collateral for borrowing for clients, with a roadmap for additional digital and RWA assets held in custody at Anchorage. Not only was this a meaningful step in further institutionalizing our product suite, but we also expect to continue these kinds of integrations as we take advantage of interoperability of and growing demand for blockchain applications.
Another example, Rysk Finance's simplified front end for users to write option strategies on cash or digital assets has seen substantial interest for integration, the same way that mobile wallet platforms like Phantom and MetaMask integrated Hyperliquid perpetuals via builder codes.
As we did with offering DoubleZero Edge data feeds from our existing validator operations, we see opportunities to use the Rysk Premium offering as a way to scale DeFi monetization revenue and bring our products to a new set of users. We'll share more as things are finalized. In October, we claimed our second KNTQ airdrop, purchasing at a discount price of $0.26, which currently trades at around $0.30-$0.35.
We continue to use both iHYPE and kHYPE products offered by Kinetiq to take advantage of liquidity around our staked HYPE. The Kinetiq team also recently announced Elysium, a Layer two built on the HyperEVM. Already, several well-known builders from the other ecosystems have announced their plans to be on Elysium on day one, including Uniswap, pump.fun, and FOMO.
Elysium's unique fee distribution design incentivizes builders and KNTQ holders to not only participate in building on the Layer two, but also position for value capture, given that more than 50% of the sequencer fees go to the buyback and burn of KNTQ. This occurs while all L2 gas fees are paid in HYPE.
While continuing to strengthen both our product suite and balance sheet, we also announced on October 2nd that we had repaid approximately $8.6 million of legacy debt to Avenue Capital, and we now carry no legacy debt. We thank Avenue for supporting us through the transformation. We ended the quarter with approximately $14.5 million in cash, equivalents, and stablecoins.
We made the decision deliberately to retire debt that removed a fixed claim on our assets that sat ahead of shareholders, and an interest cost that did little for our DeFi businesses. A clean balance sheet is what allows us our operating leverage to show up in the numbers. On the numbers, the key highlight I am most proud of, Q3 was our lowest share of adjusted gross profit generated solely from HYPE staking.
This ties well into how our full-year adjusted gross profit guidance was raised to $7 million-$8 million, as well as our expectation for positive core operating earnings in Q3. We have been able to successfully accomplish that, and David will now speak to those aspects in detail.
Thank you, Hyunsu. In June of 2025, we set out to establish a new kind of company, one which is blockchain and DeFi native and shares in multiple frontiers of value creation at the same time. Those three frontiers include asset value, which is our HYPE treasury, operating value, which is our DeFi businesses, and option value, which is our embedded economic upside in the Hyperliquid ecosystem. We call this our HYPD Triple-Dip Strategy.
In our 15 months of operating performance, we have redefined what it means to be a digital asset treasury. Not only have we substantially grown our treasury position in HYPE, but we have launched multiple businesses and built new products and services on Hyperliquid, all while reducing our costs over time.
We have delivered on our promises made since day one, and we have now reached a milestone achieved by few crypto companies and even fewer DApps. In Q3, we achieved positive core operating earnings and positive adjusted net operating cash flow ahead of our initial year-end target, while also retiring all of our legacy debt and beginning to buy back our shares.
Here are our 15-month highlights illustrating how far we have come. Since June of 2025, our gross HYPE tokens have increased 41% from 1.31 million to 1.85 million HYPE tokens, even after selling HYPE in Q3 to help retire our legacy debt. From Q3 2025 to Q3 2026, our quarterly adjusted gross profit has run 536% from $0.4 million to $2.8 million as our DeFi businesses have ramped.
We have earned more than two times and as much as 3.6 times base HYPE staking yield in each of the last four quarters. Meanwhile, our core operating expenses have declined 48% from $4.3 million to $2.2 million as our legacy biotech segment has been wound down. As a result, core operating earnings has swung from a loss of $3.9 million in Q3 2025 to a gain of $0.6 million in Q3 2026. Our adjusted net operating cash flow has improved from an outflow of $2.8 million to positive $0.1 million.
Over the full 15 months, our net asset value has grown 338% from $42 million to $182 million. We have now received equity or token upside in seven early-stage builders and infrastructure partners on Hyperliquid.
The sophistication and excellence of our operating businesses has begun to mature as we bring together all that the Hyperliquid blockchain has to offer into one unified institutional infrastructure layer. That sophistication has delivered strong financial results in Q3, including our third consecutive quarter of record net income. Now for Q3 quarter-over-quarter results. Our Q3 adjusted gross profit grew 143% quarter-over-quarter from $1.2 million to $2.8 million, above the $2.0 million-$2.5 million range we guided to on September eighth.
We achieved 3.6x base staking yield in Q3. This quarter again demonstrated the benefit of our five diversified DeFi income sources, with four of the five segments growing quarter-over-quarter and four out of five achieving all-time company highs over the past 15 months. I will now go through each of those five segments. Starting with staking yield.
In Q3, we earned 10,313 HYPE tokens, or $785,000 from staking our HYPE to our Kinetiq x Hyperion validator. This was up 49% quarter-over-quarter, driven by the increase in the price of HYPE from an average of 51.2 over Q2 to 75.9 over Q3. Next, validator commissions. In Q3, we earned 572 HYPE tokens, or $41,000 in validator commissions from third-party tokens delegated to our validator, roughly flat on a dollar basis versus Q2. Blockdaemon and Gemini have both chosen our validator for delegated HYPE staking through their respective platforms.
We continue to see multiple opportunities for validator growth, driven by the products and services we are creating, plus demand from institutions for world-class validator infrastructure. In total, in Q3, we earned about 10.9 thousand HYPE tokens from staking and validating, roughly in line with the 11.1 thousand we earned in Q2.
Next, our yield enhancement strategies, which primarily monetize volatility on HYPE, including in our vault with Rysk, generated $381,000 in Q3, which is +14% quarter-over-quarter versus $334,000 in Q2. Our DeFi monetization segment captures a host of products and services we are building on Hyperliquid together with our partners.
This quarter, DeFi monetization more than doubled, up 112% from $158,000 in Q2 to $334,000 in Q3. In our last earnings call in August, we mentioned that we had redeployed 1 million HYPE tokens into new house partnerships since June 2026, including Entropy and Skew, HIP-3 and HIP-4 markets. We expected those new deployments over time to reposition us better than before. We have now proven this out in Q3, with our DeFi monetization segment achieving a record for the company.
Ecosystem rewards generated $1.3 million of adjusted gross profit in Q3 versus $90,000 in Q2. We stated previously that we expect the quarter-over-quarter change in ecosystem rewards to be volatile, given the unexpected timing of airdrops, token generation events, and other rewards activity. Q3 is our largest quarter to date of ecosystem rewards, and this is now the fourth consistent quarter of activity in the segment.
The Q3 figure reflects two pieces. First, $505,000 for the 10 million 2Z tokens we received from DoubleZero in September. Second, $750,000 for the Skew equity we are contractually owed based on Skew's most recent raise. Our list of ecosystem positions we have accumulated over the past 15 months continues to grow, and here are the other five of our seven total exposures to date.
In Q4 2025, we received 1.92 million KNTQ tokens from Kinetiq in their token generation event. Since then, we have been staking our KNTQ and have accrued approximately 64,000 additional KNTQ tokens. We messaged that we were continuing to earn Kinetiq points and exp ected additional benefits to follow.
On October 11th, we executed on a right to purchase 490,000 additional KNTQ tokens at a discount basis of $0.26 each, bringing our overall position to about 2.5 million tokens valued at about $750,000 versus our basis of just $128,000. In Q1, we received 10 million HPL tokens from HyperLend as part of our various partnerships previously discussed. In Q1, we also gained the right to receive 1% future token or equity in Silhouette.
In September, as a launch partner for D3's Frontier Vaults, we became entitled to an allocation of DOMA tokens from a potential future token generation event. We are also earning Rysk points from our vault activity and may become eligible for future Rysk tokens. We expect this list to continue to grow as we deepen our partnerships and relationships across the Hyperliquid ecosystem.
As a reminder, we believe the upside we have to the broader Hyperliquid ecosystem is unique among any other U.S. public company. Moving on to our Q3 expenses. Operating expenses, excluding stock-based compensation, declined 4% quarter-over-quarter from $2.3 million in Q2 to $2.2 million in Q3, within our guided range of $2.0 million-$2.25 million.
As a reminder, the Q3 figure of $2.2 million is about half of the $4.3 million we spent in Q3 2025, our first quarter since adopting the new DeFi strategy. The reduced costs speak to our light operating model, offering strong earnings leverage. Because adjusted gross profit exceeded these expenses, core operating earnings was positive $0.6 million in Q3, the first positive quarter since we adopted our DeFi strategy, and above the $0 million-$0.5 million range we guided to.
It also compares to a Q2 loss of about $1.2 million, a quarterly swing of plus $1.7 million on core operating profitability. On the treasury side, our gross HYPE tokens decreased from 2.04 million in Q2 to 1.85 million in Q3, as we sold HYPE in the quarter primarily to fund the retirement of our legacy debt.
The price of HYPE increased from $65 at the end of Q2 to $91 at the end of Q3. This compares to our aggregate purchase price in HYPE tokens of $40, meaning the value of our HYPE treasury at $168 million as of Q3 exceeded our cash basis of $74 million by approximately $94 million. Our net asset value, which adjusts our treasury value for net cash and debt, increased from $134 million as of Q2 to $182 million as of Q3.
Treasury gains was $48 million in Q3 as the price of HYPE increased versus a gain of $55 million in Q2. In totality, Q3 net income of $39.6 million, the third sequential quarterly record for the company, compares to Q2 net income of $31.0 million. Q3 adjusted EBITDA of $48.7 million compares to Q2 adjusted EBITDA of $53.7 million.
As with Q2, the primary Q3 reconciliation of net income to adjusted EBITDA is our liquid staking tokens, or LSTs, for which the GAAP carrying value is the low watermark price of the underlying native token. The in-period adjustment was $5.7 million in Q3 versus $21.8 million in Q2, which is the main reason adjusted EBITDA declined sequentially while net income grew in Q3.
If all our HYPE LSTs were converted back to HYPE at the end of Q3, we believe that would have increased our GAAP net income by approximately $38.3 million. Regarding our cash flows and cash position, consistent with the prior quarter, we focus on two non-GAAP adjusted cash flow metrics meant to adjust for the fact that under GAAP, we cannot treat USDC stablecoin as a cash equivalent.
These are all more fully defined and reconciled in our earnings release and earnings supplement available online. Adjusted net operating cash flow was positive $0.1 million in Q3, our first positive quarter within our guided range, which compares to $2.1 million of outflows in Q2. Adjusted net investing cash flow was a $12.8 million inflow in Q3 versus a $6.2 million outflow in Q2.
Primarily reflecting about $13 million of HYPE sales and no HYPE purchases in the quarter. We are pleased to highlight that in Q3, we commenced the optimization of our balance sheet and capital structure. In Q3, we repaid all outstanding principal and interest on our Avenue Capital loan, approximately $8.6 million, and we have begun repurchasing our shares under the $20 million buyback program we announced on September 8th.
In the quarter, we repurchased 240,000 shares at a weighted average price of $3.21 per share, which at the time was approximately a 30% discount to our net assets. In totality, net cash used in financing activities was $10.1 million in Q3 versus $11.0 million cash provided by financings in Q2. We ended the quarter with $14.5 million of cash equivalents, and stablecoins, and no long-term debt outstanding.
As of November ninth, our common share count is approximately 15.5 million shares. We remain committed to further steps to improve our capital structure for the benefit of shareholders over time. If we continue to trade at a discount, we are prepared to continue repurchasing shares, given our strong liquidity position at this time.
Looking ahead, in our first earnings call under the new DeFi strategy in November 2025, we set out ambitious financial goals, which we continue to stand behind as we innovate and grow our businesses. We originally gave guidance of $4 million-$6 million of adjusted gross profit for 2026, raised that guidance in May to $5 million-$7 million, and raised it again on September 8 to $7 million-$8 million.
Through the first nine months of the year, we have generated $4.9 million of adjusted gross profit, roughly 70% of the low end of that range, and we today are reiterating that range of $7 million-$8 million for full year 2026.
In addition, on that first earnings call in November 2025, we guided to our adjusted net operating cash flow flipping positive by the end of 2026, and we have delivered that in Q3. We have demonstrated consistent quarterly performance, including growing businesses, declining costs, and improving cash flows. We continue to believe we have the right team, partners, and resources, and the right chosen blockchain in Hyperliquid to achieve these financial goals. With that, we look forward to answering your questions.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Jim McIlree with Chardan Capital Markets.
Thank you. Good morning. I was hoping you could elaborate a little bit more on your capital allocation strategy. David, I think you referred to if the shares continue to trade at a discount to NAV, you would do more buybacks. It has been pretty persistent for a while now, and I am just curious, what is the trigger point for that? Secondly, relative to the other coins that you own, Kinetiq and the others, I would like to know how you are thinking about those from a holding strategy, or if you would think about liquidating those, and what the trigger points for that might be. Thank you.
Good morning, and thanks very much, Jim, for the question. I will take the question on capital strategy, then turn it over to Hunsu in terms of the coin strategy. As we mentioned, we ended the quarter with about $15 million of cash equivalents, and stablecoin, and no debt outstanding. This is our first quarter of being core positive from an adjusted net operating cash flow position.
Given that we are continuing to be at a substantial discount to our net assets, at about a 30% discount, we strongly consider buying back shares versus other sources of deployment for our cash. That is a frontier that we are always continuing to evaluate in terms of what is best for the long-term value to our shareholders.
With our cash, we can buy HYPE, we can think about other sorts of businesses and other sorts of partners to support. In terms of the strategy, it continues to be very, very dynamic in terms of where that next dollar should go. However, we purchased 240,000 shares at a 30% discount in September, and given our robust liquidity position and operations, it could be prudent for us to continue buying back.
In terms of what changed, I think what really changed is now all of the debt is gone, and now our core operations are positive from a cash flow perspective. Since those two inflection points have reached, I think that substantially increases our capacity to buy back shares without getting in the way of other kinds of activity that we might want to do with our cash.
Adding onto that, Jim, with regard to other tokens on the balance sheet, as a reminder, these were earned or received at zero cost for most as part of a larger product or service design. We identified each counterparty-specific product to have value in the broader financial services stack that we are building on Hyperliquid, while also recognizing that there is intrinsic value to the fact that many of these are in earlier stages, but we have the right and liquidity to optimize for either purchasing more HYPE, buying back more shares, maximizing the utility on each of the additional balance sheet tokens.
For Kinetiq, for example, we saw a unique opportunity given the fact that the Elysium L2 just rolled out earlier this week. We are already seeing substantial volumes and the migration of leading applications like Uniswap, pump.fun, and FOMO on the Layer two.
We are monitoring very closely to see how the value accrual is derived to KNTQ, and if we see sufficient opportunity there, it may make sense to hold the assets for longer. If we identify a better use for some of these assets, then we would be able to potentially liquidate or migrate them to other aspects of our broader operating strategy.
That's very helpful. Thank you. If I can just follow on, I think this is the first quarter that operating expenses are kind of normalized. Number one is that correct? This is the first normalized operating expense quarter that you've reported? Then secondly, how are you viewing the infrastructure in terms of people and equipment that you have that would affect operating expenses going forward, particularly given the strategies that you have for growth?
Thanks, Jim, for the follow-on. Yes, this is the first that is almost normalized, still not completely normalized. Meaning that there were still some elements related to legal costs and the full exits of the biotech in July to Arctic Vision that were incurred. They were not material, they were not super substantial, but those will be completely gone beginning in Q4.
We do aspire to continue to reduce costs as we become more efficient and as we overall just streamline total operations. In terms of how we are set up, our company is seven employees, and there are a number of outside firms and agencies that we use on a fractional basis for certain activities. We've chosen to build businesses on the blockchain for several reasons, and one of those reasons is because by design, they are infinitely scalable.
When we create, for example, our first HYPE asset use structure, towards the end of last year, it's the same fundamental framework in terms of the setup on the blockchain and the legal framework and the cadence of custody and movement that we've replicated several times. Sure, we refine a little bit along the way and make things more robust, but it doesn't cost more to do.
So I do think that, as mentioned at the end of my prepared remarks, that we do have the right team and the right setup. Even as we are expanding, we do not expect our costs to materially increase unless there's some sort of stepwise change in the scope of what we do.
That's great. Thanks, guys.
Thank you, Jim.
And our next question will come from Brian Vieten with Siebert.
Great. Thanks, guys. And great to see the resilience and expansion of the HYPD Triple-Dip Strategy this quarter. I guess, what are you guys most excited about on the HYPE product side? And then does the potential U.S. launch for Hyperliquid next year open up new avenues for Hyperion to grow? Just anything on the pipeline expansion would be great.
Hey, Brian. Thanks for the question. Yeah, I think there's two components that we find extremely compelling. HIP-4 volumes have really started to ramp up, given the fact that it's only really about four months old. We're seeing a lot of the cost optimization as well as the infrastructure advantages of Hyperliquid's much more capital or cost-efficient structure around the outcome markets.
Starting to see demand for sharps that are currently using Polymarket and Kalshi. And on that side, fees continue to increase, and I believe that we are going to see a pretty meaningful shift going into next year as the actual infrastructure that's been built on HIP-4 from teams that we back, like Skew, with the RFQ product accelerating the participation from both market makers and retail users, as well as creating avenues for better distribution.
On the other side, with HIP-3*, we find that extremely compelling. I think the assessment of the landscape of new participants to Hyperliquid, we saw the very early interest from Payward Kraken, and then most recently with trade.xyz and ICE. It seems very likely that there would be others that are looking at the opportunity to create permissioned perpetuals markets on Hyperliquid.
A fundamental component of being able to come online is the acquisition of 500,000 HYPE. The structure is something that only Hyperion is currently positioned and optimized to deploy. We see opportunities to not just be able to provide that stake, but continue our model of acquiring or accessing more of the upside of our counterparties, as well as being able to integrate and scale our other products set, in addition to providing that HYPE. Both components of the HyperCore side still remain quite compelling, and I think the growth there is really only at the beginning.
Awesome. Thanks for that, guys.
Thanks, Brian.
Thank you, Brian.
This now concludes our question and answer session. I would like to turn the floor back over to our CEO, Hyunsu Jung, for closing comments.
Great. Thank you. When we started, it was our job to convince you that Hyperion DeFi could be much more than a token holder, and the best way to prove it was with the numbers. Our third quarter results demonstrate the impact of continued commercial scaling in Hyperion DeFi's unique operating model and our ability to source diverse revenues through our unique ecosystem engagement capabilities.
We are confident in our ability to continue to innovate on product design and our focus on scaling through distribution via integrations with both on and off-chain platforms, which we expect to continue in Q4, acceleration in 2027, as this broader trend of tokenization and blockchain adoption continues. In that regard, Hyperliquid and its ecosystem partners are focused on the acceleration in the regulatory front, part of a larger mission to have its infrastructure available in the U.S.
As I mentioned earlier, HIP-3* is an important aspect of that mission, and early signals have been positive with teams like Kraken and ICE indicating publicly that they are working to create permissioned perpetual markets to be available in the U.S. and beyond. Again, our assessment of the landscape of new participants finds that our house product will continue to be valuable, as we are the only team currently positioned to move quickly and provide our HYPE as a service to new participants.
More importantly, we see and continue to expect demand not just for HYPE, but for a broad array of on-chain financial infrastructure that covers staking, RWA support, lending, structured products, and so on. The unified blockchain for finance, Hyperliquid, is well-positioned to capture that capital, and it is our belief that builders stand to benefit the most.
As a core builder in the ecosystem, we will prioritize value creation and its return to shareholders, driven by a product-first focus that allows us to position each alongside another, essentially supporting full-stack on-chain financial services infrastructure. To our investors and partners, thank you for your support as we continue to execute on our roadmap to become the institutional gateway for Hyperliquid. Thank you.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.