Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Leveraging Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has granted access to ten wallets for testing and has assessed three out of five compliance criteria. This suggests that the centralized exchange might be considering a permissioned HIP-3 market.
Summary
- A total of ten wallets have been approved for testing deployment through a gated approach.
- Currently, three out of five compliance criteria are being reviewed, with active implementations including mandatory position reductions and collateral transfers.
- As of now, Kraken has not formally acknowledged its participation in the testnet deployment.
- HIP-3 allows external developers to establish perpetual markets utilizing Hyperliquid’s trading infrastructure.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer dubbed “Kraken HIP-3 test DEX” implemented a permission system referred to as Star Gating on Hyperliquid’s testnet, which began on August 19.
This deployment has successfully incorporated ten wallets into the authorized user list, and three out of five compliance measures on the testnet have been evaluated, as reported by Devens. Additionally, a validator has registered under the name “Kraken Exchange Validator.”
Unverified Connection Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been upgrading testnet functionalities to facilitate regulated or licensed participants. In addition to wallet whitelisting, new features now allow a deployer to cancel users’ open orders, close positions through reduce-only orders, and manage collateral transfers.
Unlike typical user-initiated trades, these actions provide the deployer with direct control over an account or position. This framework equips operators with the tools to restrict access, ensure compliance with regulatory standards, manage risks, and withdraw funds as needed.
Such mechanisms are standard in centralized exchanges, where account access depends on identity verification and compliance protocols. Their implementation in HIP-3 could enable the creation of a permissioned market while leveraging Hyperliquid’s on-chain order book and settlement system.
In her analysis, Devens speculated that Kraken may become “the first compliant HIP-3 deployer,” but she emphasized that mentioning it does not validate Kraken’s involvement. Hyperliquid’s testnet permits permissionless deployments, allowing any independent user to create a market or validator under the exchange’s branding.
As of this report, neither Kraken nor Hyperliquid has officially confirmed any collaborative efforts or testing. Current evidence suggests a Kraken-branded deployment is utilizing the new controls, but does not explicitly confirm Kraken as the developer.
Exploring the HIP-3 Framework by Hyperliquid
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to manage perpetual futures markets using HyperCore, the network’s trading engine. HyperCore provides the order book, matching mechanisms, margin features, and liquidation protocols, while each deployer establishes their own market rules and trading conditions.
Previous reports from crypto.news indicated that HIP-3 was officially initiated on the mainnet on October 13, 2025. To operate independently as a perpetual exchange without needing approval from Hyperliquid’s core team, a developer must stake 500,000 HYPE.
Deployed markets can specify listed assets, price oracles, collateral requirements, margin specifications, leverage limits, and funding protocols. The first three assets can be listed without an auction; however, subsequent assets necessitate a Dutch auction among deployers.
The necessity of a 500,000 HYPE stake serves as a financial safeguard. Validators can impose penalties on this stake if a deployer breaches oracle usage rules or market regulations, and this obligation remains for 30 days following the closure of the operator’s market.
Markets established under HIP-3 allow the deployer to retain 50% of the fees collected. A report from July 3 indicated 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 impact this structure. While anyone can establish a HIP-3 market as long as they comply with protocol standards, a deployer utilizing Star Gating could restrict trading to approved wallets within their market.
This strategy enables an operator to combine public blockchain settlement with identity verification, geographic restrictions, or other account-specific regulations. It remains uncertain whether these features will be implemented on the mainnet and under what conditions.
Kraken’s Strategy in Regulated and Blockchain Markets
The link with the testnet has piqued interest, especially as Kraken and its parent company, Payward, have been evolving throughout 2026 to integrate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began offering U.S. stocks to eligible clients within the European Economic Area. This service includes over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Traditional stock services are provided by Payward Europe Digital Solutions, an investment platform based in Cyprus, regulated under the EU’s MiFID II framework. Kraken announced that xStocks have generated over $38 billion in transaction volume since launching these tokenized products in June 2025.
Earlier in 2026, the company introduced xChange, an on-chain execution system that initially supported over 70 tokenized equities across Ethereum and Solana. Subsequently, Kraken enabled eligible clients outside the U.S. to utilize specific xStocks as collateral for futures and margin positions.
Payward is also planning to expand its offerings beyond U.S. equities. After collaborating with trading infrastructure firm GTN in July, they intend to incorporate shares from Hong Kong, eventually extending to the UK, Europe, South Korea, and other regulated markets, subject to local regulations.
Devens highlighted Hyperliquid’s initiatives surrounding xStocks and Payward’s recent advancements as potential indications of a link to Kraken during the testing period. However, her conclusions remain largely speculative, based on names and timelines rather than confirmed details from either party.
U.S. Derivative Regulations May Limit Accessibility
For users in the U.S., a permissioned HIP-3 deployment does not automatically guarantee legal access to on-chain perpetual contracts. Typically, commodity derivatives accessible to American retail investors must originate from firms registered with the Commodity Futures Trading Commission.
