Kraken Launches Investigation into Decentralized Exchange Adhering to HIP-3 and Utilizing Hyperliquid Technology
On the Hyperliquid testnet, a deployer identified as Kraken has granted access to testing for ten wallets, which currently meet three out of five essential compliance benchmarks. This suggests that the centralized exchange is preparing to roll out a permissioned HIP-3 market.
Summary
- Access for testing has been provided for ten wallets within a regulated environment.
- Three out of five compliance metrics are currently being evaluated, focusing on activities like position modifications and collateral adjustments.
- So far, Kraken has not made any public announcement concerning its role in the testnet deployment.
- HIP-3 enables external developers to create perpetual markets utilizing Hyperliquid’s trading infrastructure.
On August 22, Blockworks analyst Shaunda Devens disclosed that a deployer named “Kraken HIP-3 test DEX” initiated a permissioning procedure called Star Gating on the Hyperliquid testnet, commencing on August 19.
This deployment has successfully integrated ten wallets as identified participants, with three out of five compliance standards currently under review, as mentioned by Devens. A further validator named “Kraken Exchange Validator” has also been acknowledged.
Unverified Link Between Kraken and HIP-3 Test
Devens observed that Hyperliquid is continually refining the capabilities of the testnet to cater to regulated users. Besides wallet whitelisting, recent updates now permit deployers to cancel open orders, conclude positions using reduced-only orders, and oversee collateral transfers.
These functionalities are distinct from typical user-driven processes, granting deployers authority over accounts or positions. This structure allows operators to manage access, ensure compliance, mitigate risks, and withdraw funds when necessary.
Such features are typical in centralized exchanges, where access is contingent upon identity verification and compliance criteria. The integration of these protocols within HIP-3 may facilitate a permissioned market leveraging Hyperliquid’s on-chain order book and settlement systems.
In her analysis, Devens speculated that Kraken could be “the first compliant HIP-3 deployer,” albeit she emphasized that her insights do not confirm Kraken’s active participation. Hyperliquid’s testnet supports permissionless deployments, allowing any user to establish a market or validator using the platform’s branding.
As of this report, neither Kraken nor Hyperliquid has confirmed any partnership or testing agreements. Current evidence suggests that a Kraken-branded deployment is utilizing the newly implemented controls, but definitive proof connecting Kraken as the deployer remains lacking.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to operate perpetual futures markets using HyperCore, the network’s trading engine. HyperCore includes the order book, matching algorithms, margin functionalities, and liquidation protocols, allowing each deployer to set their 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 function 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 guidelines, margin thresholds, leverage limits, and funding methods. The first three assets listed can do so without a Dutch auction, while additional assets will necessitate a bidding process among deployers.
The requirement to stake 500,000 HYPE serves as a financial security measure. Validators can penalize this stake if a deployer fails to adhere to oracle usage regulations 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 generated. A July 3 update revealed that open interest in HIP-3 exceeded $1.43 billion, with contracts connected to equities and commodities representing seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly influence 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 setup permits operators to combine public blockchain settlement with identity verification, geographical limitations, or other specific account regulations. It remains to be seen whether these functionalities will be applied to the mainnet and under what circumstances.
Kraken’s Strategies in Regulated and Blockchain Markets
The emphasis on the testnet is vital, especially as Kraken and its parent company, Payward, adapt in 2026 to include securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange commenced offering U.S. stocks to eligible clients located in the European Economic Area. This includes over 7,000 traditional U.S.-listed stocks, approximately 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 reported that xStocks have achieved over $38 billion in transaction volume since their introduction in June 2025.
Earlier in 2026, the company launched xChange, an on-chain execution system initially supporting over 70 tokenized equities on Ethereum and Solana. Subsequently, Kraken enabled eligible clients outside the U.S. to utilize select xStocks as collateral for futures and margin positions.
Payward is also considering expansion beyond U.S. equities. Following a partnership with trading infrastructure firm GTN in July, they plan to incorporate Hong Kong shares and extend into the UK, Europe, South Korea, and other regulated markets, depending on local regulations.
Devens pointed out Hyperliquid’s advancements regarding xStocks and Payward’s recent efforts as potential indicators of a partnership with Kraken during the testing phase. However, her conclusions are largely speculative, based more on names and timelines than confirmed information from either party.
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. Usually, commodity derivatives available to American retail investors must be provided by entities registered with the Commodity Futures Trading Commission.
