Kraken Launches Investigation into Decentralized Exchange adhering to HIP-3 and Utilizing Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has enabled access for testing to ten wallets, currently fulfilling three out of five principal compliance criteria. This suggests that the centralized exchange is on the verge of launching a permissioned HIP-3 market.
Summary
- Ten wallets have been granted testing access within a regulated environment.
- Three out of five compliance metrics are under review, focusing on areas like position adjustments and collateral modifications.
- As of now, Kraken has not released any public announcements regarding its role in the testnet deployment.
- HIP-3 allows external developers to build perpetual markets using Hyperliquid’s trading infrastructure.
On August 22, Blockworks analyst Shaunda Devens disclosed that a deployer referred to as “Kraken HIP-3 test DEX” initiated a permissioning process dubbed Star Gating on the Hyperliquid testnet, which commenced on August 19.
This deployment has successfully integrated ten wallets as participating entities, with three out of five compliance criteria currently undergoing assessment, as noted by Devens. An extra validator, known as “Kraken Exchange Validator,” has also been identified.
Unverified Association Between Kraken and HIP-3 Test
Devens noted that Hyperliquid is continuously advancing the capabilities of the testnet to accommodate regulated users. Beyond wallet whitelisting, recent enhancements now enable deployers to cancel outstanding orders, close positions using reduced-only orders, and oversee collateral transitions.
These functions are distinct from regular user-driven processes, giving deployers authority over accounts or positions. This framework enables operators to manage access, ensure compliance, mitigate risks, and withdraw funds when necessary.
Such features are typical in centralized exchanges, where access depends on identity verification and compliance standards. The introduction of these protocols within HIP-3 could facilitate a permissioned market utilizing Hyperliquid’s on-chain order book and settlement systems.
In her analysis, Devens proposed that Kraken might emerge as “the first compliant HIP-3 deployer,” although she emphasized that her observations do not substantiate Kraken’s involvement. Hyperliquid’s testnet permits permissionless deployments, enabling any user to establish a market or validator using the platform’s branding.
At the time of this report, neither Kraken nor Hyperliquid has confirmed any partnership or testing arrangements. Current signals suggest that a Kraken-branded deployment is utilizing the newly implemented controls, but substantial proof linking Kraken as the deployer remains absent.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, allows independent developers to develop perpetual futures markets utilizing HyperCore, the network’s trading engine. HyperCore includes the order book, matching algorithms, margin functionalities, and liquidation protocols, enabling each deployer to set their own market rules and trading conditions.
Previous reports from crypto.news indicated that HIP-3 was officially launched on the mainnet on October 13, 2025. To operate independently as a perpetual exchange without needing approval from Hyperliquid’s centralized team, developers must stake 500,000 HYPE.
Markets created can define parameters for assets, price oracles, collateral requirements, margin thresholds, leverage limits, and funding mechanisms. The first three assets can be defined without a Dutch auction, while additional assets will necessitate a bidding process among deployers.
The requirement to stake 500,000 HYPE acts as a financial assurance mechanism. Validators may penalize this stake if a deployer fails to adhere to oracle usage regulations or market standards, with this obligation lasting 30 days after market closure.
Markets established under HIP-3 allow deployers to retain 50% of the fees generated. A July 3 update revealed that open interest in HIP-3 exceeded $1.43 billion, with contracts tied to equities and commodities representing seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly transform this framework. While anyone can launch a HIP-3 market as long as they comply with protocol guidelines, a deployer utilizing Star Gating might limit trading to specific wallets within their market.
This configuration enables operators to combine public blockchain settlement with identity verification, geographical limitations, or other specific account stipulations. It remains uncertain whether these features will be enacted on the mainnet and under what circumstances.
Kraken’s Approaches in Regulated and Blockchain Markets
The emphasis on the testnet is crucial, especially as Kraken and its parent organization, Payward, adjust in 2026 to encompass securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange initiated the offering of U.S. stocks to qualified clients within the European Economic Area. This encompasses over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Standard stock offerings are regulated by Payward Europe Digital Solutions, an investment platform compliant with the EU’s MiFID II framework, located in Cyprus. Kraken reported that xStocks generated in excess of $38 billion in transaction volume since their launch in June 2025.
Earlier in 2026, the company introduced xChange, an on-chain execution system initially supporting over 70 tokenized equities on Ethereum and Solana. Subsequently, Kraken permitted eligible clients outside the U.S. to use certain xStocks as collateral for futures and margin positions.
Payward is also exploring expansion beyond U.S. equities. After partnering with trading infrastructure firm GTN in July, they plan to include Hong Kong stocks and extend into the UK, Europe, South Korea, and other regulated markets, subject to local regulations.
Devens pointed out Hyperliquid’s advancements regarding xStocks and Payward’s recent initiatives as potential indicators of a partnership with Kraken during the testing phase. However, her conclusions are largely conjectural, relying more on names and timings than verified information from either entity.
U.S. Derivative Regulations May Restrict Access
For users in the U.S., a permissioned HIP-3 deployment does not ensure legal access to on-chain perpetual contracts. Generally, commodity derivatives accessible to American retail investors must be provided by entities registered with the Commodity Futures Trading Commission.
