Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Powered by Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has granted testing privileges to ten wallets and has evaluated three out of five compliance criteria. This suggests that the centralized exchange may be preparing to launch a permissioned HIP-3 market.
Summary
- Testing permissions for deployment have been granted to ten wallets within a controlled environment.
- Currently, three of the five compliance criteria are being assessed, with necessary actions like mandated position reductions and collateral transfers being executed.
- As of now, Kraken has not officially confirmed its participation in the testnet deployment.
- HIP-3 allows external developers to build perpetual markets using Hyperliquid’s trading infrastructure.
On August 22, analyst Shaunda Devens from Blockworks reported that a deployer named “Kraken HIP-3 test DEX” launched a permissioning initiative referred to as Star Gating on the Hyperliquid testnet, which began on August 19.
This deployment has successfully included ten wallets as authorized users, with three of five compliance criteria being analyzed, as noted by Devens. Furthermore, a validator has been listed as “Kraken Exchange Validator.”
Unverified Connection Between Kraken and HIP-3 Test
Devens pointed out that Hyperliquid has been enhancing the testnet’s features to accommodate regulated users. Alongside wallet whitelisting, new tools allow deployers to cancel open orders, close positions through reduce-only orders, and oversee collateral transfers.
In contrast to typical user-driven trades, these features give the deployer direct control over an account or position. This configuration offers operators mechanisms to limit access, ensure compliance, manage risk, and withdraw funds as needed.
Such protocols are commonly utilized in centralized exchanges, where access to accounts is contingent upon identity verification and compliance procedures. Their integration into HIP-3 could pave the way for a permissioned market that leverages Hyperliquid’s on-chain order book and settlement mechanism.
In her review, Devens posited that Kraken could be “the first compliant HIP-3 deployer,” yet she emphasized that her observation does not confirm Kraken’s involvement. Hyperliquid’s testnet permits permissionless deployments, allowing any independent user to create a market or validator under the exchange’s name.
As of this report, neither Kraken nor Hyperliquid has validated any collaborative efforts or testing activities. Current information suggests that a Kraken-branded deployment is utilizing the new controls, but definitive proof establishing Kraken as the developer is lacking.
Exploring Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to run perpetual futures markets using HyperCore, the network’s trading engine. HyperCore provides the order book, matching engines, margin functionalities, and liquidation protocols, with each deployer defining their market rules and trading terms.
Previous reports from crypto.news indicated that HIP-3 was officially launched on the mainnet on October 13, 2025. To independently function as a perpetual exchange without seeking approval from Hyperliquid’s central team, a developer is required to stake 500,000 HYPE.
Markets established can specify assets, price oracles, collateral requirements, margin limits, leverage restrictions, and funding methods. The first three assets can be listed without a Dutch auction, while subsequent assets require a bidding system among deployers.
The 500,000 HYPE staking requirement acts as a financial protection measure. Validators have the authority to penalize this stake if a deployer breaches oracle usage guidelines or market regulations, with this accountability enduring for 30 days post the closure of the operator’s market.
Markets initiated under HIP-3 allow the deployer to retain 50% of the fees generated. A report dated July 3 noted that open interest in HIP-3 exceeded $1.43 billion, with contracts related 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 establish a HIP-3 market as long as they comply with protocol standards, a deployer using Star Gating could confine trading to approved wallets within their market.
This method allows operators to combine public blockchain settlement with identity verification, geographical limitations, or other particular account regulations. It remains to be seen whether these functionalities will be implemented on the mainnet and under what circumstances.
Kraken’s Strategies in Regulated and Blockchain Markets
The link to the testnet has garnered attention, especially as Kraken and its parent company, Payward, have been evolving in 2026 to include securities, tokenized assets, and on-chain trading options.
On August 18, the exchange started offering U.S. stocks to qualified clients in 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.
Standard stock services are provided by Payward Europe Digital Solutions, an investment platform based in Cyprus, regulated under the EU’s MiFID II framework. Kraken disclosed that xStocks have accounted for over $38 billion in transaction volume since these tokenized products were introduced in June 2025.
Earlier in 2026, the firm unveiled xChange, an on-chain execution system originally supporting over 70 tokenized equities on Ethereum and Solana. Subsequently, Kraken allowed eligible clients outside the U.S. to use specific xStocks as collateral for futures and margin positions.
Payward also intends to extend its offerings beyond U.S. equities. Following a collaboration with trading infrastructure firm GTN in July, they aim to include shares from Hong Kong, with aspirations to expand to the UK, Europe, South Korea, and other regulated markets, pending local regulations.
Devens pointed to Hyperliquid’s enhancements associated with xStocks and Payward’s recent moves as potential indicators of a collaboration with Kraken during the testing phase. Nevertheless, her conclusions are primarily speculative, based on names and timelines rather than confirmed information from either party.
U.S. Derivative Regulations May Restrict Access
For U.S. users, 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 provided by companies registered with the Commodity Futures Trading Commission.
