Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Leveraging Hyperliquid Technology
On the Hyperliquid testnet, a deployer named Kraken has provided access for testing to ten wallets, currently meeting three out of the five required compliance criteria. This suggests that the centralized exchange might be preparing to launch a permissioned HIP-3 market.
Summary
- Ten wallets have received approval for testing within a regulated environment.
- Three out of five compliance benchmarks are currently under review, involving actions such as position alterations and collateral adjustments.
- At this time, Kraken has not confirmed its participation in the testnet deployment publicly.
- HIP-3 enables external developers to create perpetual markets using Hyperliquid’s trading framework.
On August 22, analyst Shaunda Devens from Blockworks reported that a deployer referred to as “Kraken HIP-3 test DEX” began a permissioning process called Star Gating on the Hyperliquid testnet, which commenced on August 19.
This deployment has successfully onboarded ten wallets as acknowledged participants, with three out of five compliance metrics currently under assessment, as noted by Devens. A validator identified as “Kraken Exchange Validator” has also surfaced.
Unverified Connection Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been enhancing the testnet’s capabilities to accommodate regulated users. Beyond wallet whitelisting, the latest tools now allow deployers to cancel open orders, close positions using reduced-only orders, and handle collateral transfers.
Unlike regular user-driven transactions, these capabilities grant deployers control over accounts or positions. This setup equips operators to manage access, ensure compliance, mitigate risks, and withdraw funds when necessary.
Such functionalities are typically found in centralized exchanges, where access relies on identity verification and compliance criteria. The implementation of these protocols in HIP-3 could facilitate a permissioned market leveraging Hyperliquid’s on-chain order book and settlement frameworks.
In her analysis, Devens speculated that Kraken may be “the first compliant HIP-3 deployer,” although she emphasized that her findings do not confirm Kraken’s active participation. Hyperliquid’s testnet allows permissionless deployments, enabling any individual user to create a market or validator using the platform’s branding.
As of this update, neither Kraken nor Hyperliquid has confirmed any partnership or testing agreements. Current insights imply that a Kraken-branded deployment is utilizing the newly developed controls, yet there is no conclusive evidence linking Kraken as the deployer.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, permits independent developers to manage perpetual futures markets using HyperCore, the trading engine of the network. HyperCore includes the order book, matching algorithms, margin capabilities, and liquidation protocols, allowing each deployer to define their market regulations and trading conditions.
Previous 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 are required to stake 500,000 HYPE.
Markets developed can define characteristics for assets, price oracles, collateral regulations, margin limits, leverage constraints, and funding mechanisms. The first three assets can be listed without the need for a Dutch auction, while subsequent assets will require a bidding process among deployers.
The 500,000 HYPE staking requirement serves as a financial safeguard. Validators can penalize this stake if a deployer fails to comply with oracle usage standards or market criteria, with this obligation extending for 30 days after the market’s closure.
Markets established under HIP-3 enable deployers to retain 50% of the fees generated. An update on July 3 revealed that open interest in HIP-3 exceeded $1.43 billion, with contracts tied to equities and commodities constituting seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly affect this framework. Even though anyone can initiate a HIP-3 market if they comply with protocol standards, a deployer utilizing Star Gating could limit trading to designated wallets within their market.
This system allows operators to merge public blockchain settlement with identity verification, geographical limitations, or other specific account regulations. It remains uncertain whether these functionalities will be applicable to the mainnet and under what conditions.
Kraken’s Strategies in Regulated and Blockchain Markets
The attention on the testnet is crucial, especially as Kraken and its parent company, Payward, have been evolving in 2026 to integrate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began offering U.S. stocks to qualified clients in the European Economic Area. This encompasses over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all available through a single account.
Standard stock services are managed by Payward Europe Digital Solutions, an investment platform regulated under the EU’s MiFID II framework, based in Cyprus. Kraken reported that xStocks have accounted for over $38 billion in transaction volume since their inception 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. Following this, Kraken permitted qualified clients outside the U.S. to utilize select xStocks as collateral for futures and margin positions.
Payward is also exploring expansion beyond U.S. equities. Following a partnership with trading infrastructure firm GTN in July, they intend to include Hong Kong shares and expand into the UK, Europe, South Korea, and other regulated markets, subject to local regulations.
Devens pointed out Hyperliquid’s innovations related to xStocks and Payward’s recent efforts as potential signs of a partnership with Kraken during the testing phase. However, her conclusions remain primarily speculative, based on names and timelines rather than verified information from either party.
U.S. Derivative Regulations May Limit Access
For users in the U.S., a permissioned HIP-3 deployment does not ensure 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.
