Kraken Launches Investigation into Decentralized Exchange Adhering to HIP-3 and Utilizing Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has initiated testing access for ten wallets that currently satisfy three of five essential compliance criteria. This reflects the centralized exchange’s progress towards establishing a permissioned HIP-3 market.
Summary
- Ten wallets have been authorized for testing within a regulated environment.
- Evaluation is underway for three out of five compliance metrics, focusing on areas like position changes and collateral management.
- Currently, Kraken has not released any formal statements about its involvement in the testnet deployment.
- HIP-3 permits external developers to set up perpetual markets using Hyperliquid’s trading framework.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer referred to as “Kraken HIP-3 test DEX” began a permissioning procedure dubbed Star Gating on the Hyperliquid testnet, starting August 19.
This deployment has effectively onboarded ten wallets as participant entities, with three out of five compliance metrics currently under review, as noted by Devens. Additionally, a further validator identified as “Kraken Exchange Validator” has emerged.
Unverified Links Between Kraken and HIP-3 Test
Devens highlighted that Hyperliquid is continually enhancing the testnet’s capabilities to better support regulated participants. Apart from wallet whitelisting, recent developments now enable deployers to cancel open orders, manage positions through restricted orders, and alter collateral.
These functionalities differ from standard user-driven processes, granting deployers control over accounts or positions. This arrangement allows operators to manage access, ensure compliance, mitigate risks, and withdraw funds when necessary.
Such features are reminiscent of centralized exchanges, where access is dependent on identity verification and compliance standards. The integration of these protocols into HIP-3 could set the stage for a permissioned market utilizing Hyperliquid’s on-chain order book and settlement systems.
In her analysis, Devens speculated that Kraken could be positioned as “the first compliant HIP-3 deployer,” while emphasizing that her insights do not definitively prove Kraken’s involvement. Hyperliquid’s testnet is designed to support permissionless deployments, enabling any user to create a market or validator under the platform’s brand.
At this point, neither Kraken nor Hyperliquid has validated any partnerships or testing agreements. Current signs suggest that a Kraken-branded deployment may leverage the newly established controls, although robust evidence linking Kraken as the deployer is still lacking.
Exploring Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, empowers independent developers to launch perpetual futures markets via HyperCore, the network’s trading engine. HyperCore encompasses the order book, matching algorithms, margin functionalities, and liquidation protocols, allowing each deployer to set their own market rules and trading conditions.
Prior 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 central team, developers must stake 500,000 HYPE.
Markets created can specify details for assets, price oracles, collateral requirements, margin restrictions, leverage limits, and funding mechanisms. The first three assets can be detailed without a Dutch auction, whereas subsequent assets will require a bidding process among deployers.
The staking requirement of 500,000 HYPE acts as a financial security measure. Validators may impose penalties on this stake if a deployer does not comply with oracle usage guidelines or market standards, with this obligation lasting for 30 days post market closure.
Markets established under HIP-3 allow deployers to retain 50% of the fees accrued. An update on July 3 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 transform this framework. Although anyone can initiate a HIP-3 market if they fulfill protocol conditions, a deployer utilizing Star Gating might restrict trading to selected wallets within their market.
This configuration allows operators to integrate public blockchain settlement with identity verification, geographical limitations, or other specific account requirements. It remains uncertain whether these features will materialize on the mainnet and under what circumstances.
Kraken’s Approach in Regulated and Blockchain Markets
The emphasis on the testnet is particularly noteworthy, especially as Kraken and its parent company, Payward, expand in 2026 to encompass securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began offering U.S. stocks to qualified clients across the European Economic Area. This portfolio includes 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, headquartered in Cyprus. Kraken has disclosed that xStocks have accumulated over $38 billion in transaction volume since their launch in June 2025.
Earlier in 2026, the firm 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 use specific xStocks as collateral for futures and margin positions.
Payward is also evaluating the possibility of expanding beyond U.S. equities. Following a partnership with trading infrastructure firm GTN in July, there are plans to include Hong Kong stocks and extend operations to the UK, Europe, South Korea, and other regulated markets, while ensuring compliance with local regulations.
Devens remarked on Hyperliquid’s advancements regarding xStocks and Payward’s recent initiatives as potential signs of a collaboration with Kraken during the testing phase. However, her conclusions are largely speculative, drawn more from nomenclature and timelines than concrete information from either organization.
U.S. Derivative Regulations May Limit Access
For users in the U.S., a permissioned HIP-3 deployment does not guarantee legal access to on-chain perpetual contracts. Generally, commodity derivatives available to American retail investors must be offered by entities registered with the Commodity Futures Trading Commission.
