Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Powered by Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has provided testing permissions 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
- Access for deployment testing has been granted to ten wallets via a gated system.
- Currently, three of the five compliance criteria are being assessed, with necessary actions such as required position reductions and collateral transfers currently in progress.
- As of now, Kraken has not officially acknowledged its participation in the testnet deployment.
- HIP-3 enables external developers to establish perpetual markets using Hyperliquid’s trading infrastructure.
On August 22, analyst Shaunda Devens from Blockworks observed that a deployer labeled “Kraken HIP-3 test DEX” initiated a permissioning system called Star Gating on the Hyperliquid testnet, starting on August 19.
This deployment has successfully included ten wallets in the authorized user list, and three out of five compliance metrics on the testnet are being evaluated, as reported by Devens. Additionally, a validator has been registered as “Kraken Exchange Validator.”
Unverified Connection Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been improving the testnet’s features to accommodate regulated or licensed users. In addition to wallet whitelisting, new tools allow deployers to cancel users’ open orders, close positions via reduce-only orders, and manage collateral transfers.
Unlike typical user-initiated trades, these functionalities provide the deployer with direct control over an account or position. This setup equips operators with the resources to restrict access, ensure compliance with regulations, manage risk, and withdraw funds as needed.
These measures are commonly implemented in centralized exchanges, where account access is conditioned upon identity verification and compliance processes. Their incorporation into HIP-3 could pave the way for a permissioned market utilizing Hyperliquid’s on-chain order book and settlement system.
In her analysis, Devens suggested that Kraken might be “the first compliant HIP-3 deployer,” but she emphasized that her claim does not confirm Kraken’s involvement. Hyperliquid’s testnet allows for permissionless deployments, enabling any independent user to create a market or validator under the exchange’s branding.
As of this report, neither Kraken nor Hyperliquid has officially affirmed any collaborative efforts or testing. Current details imply that a Kraken-branded deployment is employing the new controls, but definitive proof confirming Kraken as the developer is lacking.
Exploring Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, allows independent developers to operate perpetual futures markets using HyperCore, the network’s trading engine. HyperCore provides the order book, matching engines, margin features, and liquidation protocols, with each deployer defining their own market rules 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 seeking approval from Hyperliquid’s core team, a developer must stake 500,000 HYPE.
Markets created can specify assets, price oracles, collateral requirements, margin limits, leverage restrictions, and funding models. The initial three assets can be listed without a Dutch auction, while subsequent assets require a bidding process among deployers.
The 500,000 HYPE staking requirement acts as a financial safeguard. Validators may penalize this stake if a deployer infringes on oracle usage policies or market regulations, with this accountability lasting for 30 days after the closure of the operator’s market.
Markets launched 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 had exceeded $1.43 billion, with contracts tied to equities and commodities comprising seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly influence this framework. While anyone can create a HIP-3 market as long as they comply with protocol standards, a deployer using Star Gating could restrict trading to approved wallets within their market.
This strategy allows an operator to merge public blockchain settlement with identity verification, geographical limitations, or other specific account regulations. It remains uncertain whether these functionalities will be realized on the mainnet and under what conditions.
Kraken’s Strategy in Regulated and Blockchain Markets
The connection to the testnet has garnered interest, especially as Kraken and its parent company, Payward, have been evolving in 2026 to include 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 service includes over 7,000 traditional U.S.-listed stocks, roughly 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 reported that xStocks have accounted for over $38 billion in transaction volume since these tokenized products began in June 2025.
Earlier in 2026, the company unveiled xChange, an on-chain execution system that initially supported over 70 tokenized equities on 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 poised to expand its offerings beyond U.S. equities. Following a collaboration with trading infrastructure firm GTN in July, they plan to incorporate shares from Hong Kong, with aspirations to extend to the UK, Europe, South Korea, and other regulated markets, depending on local regulations.
Devens pointed out Hyperliquid’s advancements related to xStocks and Payward’s recent updates as possible 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 verified information from either entity.
U.S. Derivative Regulations May Limit Accessibility
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 firms registered with the Commodity Futures Trading Commission.
