Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Leveraging Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has provided testing permissions to ten wallets and has reviewed three out of five compliance criteria. This suggests that the centralized exchange may be considering a permissioned HIP-3 market.
Summary
- Ten wallets have been authorized for deployment testing using a gated access approach.
- Presently, three out of five compliance criteria are being evaluated, with active implementations such as required position reductions and collateral transfers initiated.
- Currently, Kraken has not formally acknowledged its role in the testnet deployment.
- HIP-3 allows outside developers to establish perpetual markets using Hyperliquid’s trading infrastructure.
On August 22, analyst Shaunda Devens from Blockworks reported that a deployer called “Kraken HIP-3 test DEX” launched a permission system known as Star Gating on the Hyperliquid testnet, which began on August 19.
This deployment has effectively included ten wallets in the authorized user list, and three out of five compliance metrics on the testnet have been evaluated, as reported by Devens. Additionally, a validator has been registered under the name “Kraken Exchange Validator.”
Unverified Association Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been enhancing the testnet’s functionalities to cater to regulated or licensed users. Beyond wallet whitelisting, new features enable deployers to cancel users’ open orders, close positions through reduce-only orders, and manage collateral transfers.
Distinct from typical user-initiated trades, these actions grant the deployer direct authority over an account or position. This framework provides operators with tools to restrict access, ensure compliance with regulatory standards, manage risks, and withdraw funds when necessary.
These measures are frequently observed in centralized exchanges, where account access hinges on identity verification and compliance protocols. Their integration into HIP-3 could pave the way for a permissioned market leveraging Hyperliquid’s on-chain order book and settlement system.
In her analysis, Devens suggested that Kraken might emerge as “the first compliant HIP-3 deployer,” but stressed that her statement does not validate Kraken’s involvement. Hyperliquid’s testnet permits permissionless deployments, allowing any independent user to establish a market or validator under the exchange’s branding.
At the time of this report, neither Kraken nor Hyperliquid has officially validated any collaborative undertakings or testing. Current indications show that a Kraken-branded deployment is utilizing the new controls, but there is no definitive proof confirming Kraken as the developer.
Exploring the HIP-3 Framework by Hyperliquid
HIP-3, short for 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 engines, margin capabilities, and liquidation protocols, with each deployer crafting their own market rules and trading terms.
Earlier reports from crypto.news revealed that HIP-3 was officially launched on the mainnet on October 13, 2025. To operate independently as a perpetual exchange without obtaining approval from Hyperliquid’s core team, a developer is required to stake 500,000 HYPE.
Markets that are deployed can define listed assets, price oracles, collateral requirements, margin specifications, leverage limits, and funding mechanisms. The first three assets can be listed without an auction; however, subsequent assets necessitate a Dutch auction among deployers.
The stipulation of a 500,000 HYPE stake serves as a financial safeguard. Validators can impose penalties on this stake if a deployer violates oracle usage rules or market regulations, with this obligation lasting for 30 days after the operator’s market is closed.
Markets established under HIP-3 allow the deployer to retain 50% of the generated fees. A report from July 3 indicated that open interest in HIP-3 exceeded $1.43 billion, with contracts related to equities and commodities comprising seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly impact this structure. Although anyone can create a HIP-3 market as long as they adhere to protocol standards, a deployer employing Star Gating could restrict trading to approved wallets within their market.
This strategy enables an operator to merge public blockchain settlement with identity verification, geographic constraints, or other specific account regulations. It remains uncertain whether these features will be employed on the mainnet and under what circumstances.
Kraken’s Strategy in Regulated and Blockchain Markets
The connection with the testnet has sparked interest, especially as Kraken and its parent company, Payward, have been evolving throughout 2026 to incorporate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began offering U.S. stocks to eligible clients in the European Economic Area. This service includes over 7,000 traditional U.S.-listed stocks, approximately 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 the launch of 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 permitted eligible clients outside the U.S. to use specific xStocks as collateral for futures and margin positions.
Payward is also preparing to expand its offerings beyond U.S. equities. After partnering with trading infrastructure firm GTN in July, they plan to include shares from Hong Kong, ultimately expanding to the UK, Europe, South Korea, and other regulated markets, depending on local regulations.
Devens pointed out Hyperliquid’s developments related to xStocks and Payward’s recent advancements as potential indicators of a connection to Kraken during the testing phase. However, her conclusions remain largely speculative and are based on names and timelines rather than confirmed information from either party.
U.S. Derivative Regulations May Limit Accessibility
For users in the U.S., a permissioned HIP-3 deployment does not inherently guarantee legal access to on-chain perpetual contracts. Generally, commodity derivatives available to American retail investors must be issued by firms registered with the Commodity Futures Trading Commission.
