Kraken Launches Investigation into Decentralized Exchange Adhering to HIP-3 and Utilizing Hyperliquid Technology
On the Hyperliquid testnet, a deployer referred to as Kraken has facilitated testing access for ten wallets, which are currently fulfilling three out of five essential compliance criteria. This suggests that the centralized exchange is progressing towards the launch of a permissioned HIP-3 market.
Summary
- Testing access has been granted to ten wallets within a regulated environment.
- Three out of five compliance metrics are under evaluation, with a focus on elements like position changes and collateral adjustments.
- Currently, Kraken has not made any official announcements regarding its involvement in the testnet deployment.
- HIP-3 permits external developers to establish perpetual markets using Hyperliquid’s trading framework.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer called “Kraken HIP-3 test DEX” has started a permissioning procedure known as Star Gating on the Hyperliquid testnet, which commenced on August 19.
This deployment has successfully incorporated ten wallets as participating entities, with three out of five compliance metrics currently under review, as noted by Devens. A further validator, labeled “Kraken Exchange Validator,” has also been recognized.
Unverified Connection Between Kraken and HIP-3 Test
Devens indicated that Hyperliquid is continually enhancing the testnet functionalities to serve regulated users better. Beyond wallet whitelisting, recent upgrades now permit deployers to cancel outstanding orders, manage positions through reduced-only orders, and transition collateral.
These capabilities diverge from traditional user-driven processes, giving deployers authority over accounts or positions. This system enables operators to regulate access, uphold compliance, mitigate risks, and withdraw funds as necessary.
Such features are typical of centralized exchanges, where access relies on identity verification and compliance standards. Implementing these protocols within HIP-3 could pave the way for a permissioned market utilizing Hyperliquid’s on-chain order book and settlement mechanisms.
In her analysis, Devens speculated that Kraken might emerge as “the first compliant HIP-3 deployer,” although she emphasized that her observations do not validate Kraken’s involvement. Hyperliquid’s testnet accommodates permissionless deployments, allowing any user to create a market or validator under the platform’s branding.
As of this report, no confirmations of partnership or testing arrangements have been made by either Kraken or Hyperliquid. Current indications suggest that a Kraken-branded deployment may be using the recently established controls, yet substantial evidence linking Kraken as the deployer remains absent.
Exploring Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to launch perpetual futures markets utilizing HyperCore, the network’s trading engine. HyperCore includes the order book, matching algorithms, margin functionalities, and liquidation protocols, allowing each deployer to set their own market rules and trading conditions.
Earlier reports from crypto.news disclosed that HIP-3 was officially rolled out on the mainnet on October 13, 2025. To operate independently as a perpetual exchange without needing approval from Hyperliquid’s centralized team, developers are required to stake 500,000 HYPE.
Markets created can outline specifications for assets, price oracles, collateral requirements, margin thresholds, leverage limits, and funding mechanisms. The first three assets can be specified without a Dutch auction, while subsequent assets will require a bidding process among deployers.
The staking requirement of 500,000 HYPE acts as a financial assurance mechanism. Validators may impose penalties on this stake if a deployer fails to abide by oracle usage guidelines or market standards, with this obligation remaining for 30 days post market closure.
Markets established under HIP-3 enable deployers to retain 50% of the fees accrued. A July 3 update revealed that open interest in HIP-3 exceeded $1.43 billion, with contracts related to equities and commodities constituting seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly reshape this framework. Although any individual can launch a HIP-3 market provided they adhere to protocol requirements, a deployer leveraging Star Gating could limit trading to selected wallets within their market.
This configuration allows operators to amalgamate public blockchain settlement with identity verification, geographical constraints, or other specific account stipulations. It remains unknown whether these features will be implemented on the mainnet and under what conditions.
Kraken’s Strategies in Regulated and Blockchain Markets
The emphasis on the testnet is particularly crucial, especially as Kraken and its parent firm, Payward, evolve in 2026 to include securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange commenced offering U.S. stocks to qualified clients throughout 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, based in Cyprus. Kraken has reported that xStocks have accumulated over $38 billion in transaction volume since their launch in June 2025.
Earlier in 2026, the company introduced xChange, an on-chain execution system that initially supported over 70 tokenized equities on Ethereum and Solana. Subsequently, Kraken permitted eligible clients outside the U.S. to employ certain xStocks as collateral for futures and margin positions.
Payward is also contemplating expansion beyond U.S. equities. Following a partnership with trading infrastructure firm GTN in July, they aim to incorporate Hong Kong stocks and will extend operations into the UK, Europe, South Korea, and additional regulated markets, adhering to local regulations.
Devens noted Hyperliquid’s progress concerning xStocks and Payward’s recent initiatives as potential indicators of a collaboration with Kraken during the testing phase. However, her conclusions are largely speculative, based more on nomenclature and timelines than substantiated information from either entity.
U.S. Derivative Regulations Could Limit Access
For users in the U.S., a permissioned HIP-3 deployment does not assure legal access to on-chain perpetual contracts. Generally, commodity derivatives available to American retail investors must be supplied by entities registered with the Commodity Futures Trading Commission.
