Kraken to Explore Development of a HIP-3 Compliant Decentralized Exchange Leveraging Hyperliquid Technology
On the Hyperliquid testnet, a deployer named Kraken has approved ten wallets for testing purposes and has examined three out of five compliance controls. This suggests that the centralized exchange might be considering a permissioned HIP-3 market.
Summary
- Twelve wallets were authorized for testing deployment via a gating mechanism.
- Out of the five compliance controls, three are currently under review, with established implementations including mandatory position reductions and collateral transfers.
- As of now, Kraken has not publicly acknowledged its role or involvement in the testnet deployment.
- HIP-3 enables external developers to create perpetual markets using Hyperliquid’s trading infrastructure.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer referred to as “Kraken HIP-3 test DEX” initiated a permission system called Star Gating on Hyperliquid’s testnet, starting from August 19.
This deployment has successfully added ten wallets to its approved users list and assessed three of the five compliance controls outlined on the testnet, according to Devens. Additionally, a validator has been registered under the name “Kraken Exchange Validator.”
Unverified Connection Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been improving testnet features to accommodate regulated or licensed participants. In addition to wallet whitelisting, new features allow a deployer to cancel users’ open orders, close positions with reduce-only orders, and manage collateral transfers.
Unlike conventional user-initiated trades, each action grants the deployer direct control over an account or position. This structure enables operators to apply these capabilities to limit accessibility, ensure adherence to regulatory guidelines, mitigate risks, and withdraw funds as required.
Such mechanisms are standard in centralized exchanges, where account access depends on identity validation and compliance protocols. Their introduction in HIP-3 could facilitate a permissioned market while utilizing Hyperliquid’s on-chain order book and settlement framework.
In her analysis, Devens speculated that Kraken could be “the first compliant HIP-3 deployer,” but emphasized that merely mentioning the name does not confirm Kraken’s involvement. Hyperliquid’s testnet allows permissionless deployments, enabling any independent user to establish a market or validator under the exchange’s branding.
As of this reporting, neither Kraken nor Hyperliquid has publicly confirmed any collaboration or testing. Current information points to a Kraken-branded deployment utilizing the new controls, but it does not definitively establish Kraken as the developer.
Examining the HIP-3 Framework by Hyperliquid
HIP-3, or Hyperliquid Improvement Proposal 3, empowers independent developers to manage perpetual futures markets using HyperCore, the network’s trading engine. HyperCore provides the order book, matching mechanisms, margin functions, and liquidation procedures, while each deployer defines their market regulations and trading terms.
Previous reports from crypto.news highlighted that HIP-3 was officially launched on the mainnet on October 13, 2025. To operate autonomously as a perpetual exchange without needing Hyperliquid’s core team approval, a builder must stake 500,000 HYPE.
Deployers have the authority to define listed assets, price oracles, collateral specifications, margin conditions, leverage limits, and funding arrangements. The first three assets can be listed without an auction; however, additional assets require a Dutch auction among deployers.
The requirement to stake 500,000 HYPE serves as a financial security deposit. Validators may impose penalties on this stake if a deployer breaches oracle usage policies or market regulations, with this requirement maintained for 30 days after the operator’s market closure.
Markets established under HIP-3 allow the deployer to retain 50% of the accumulated fees. A report from July 3 indicated that open interest in HIP-3 exceeded $1.43 billion, with contracts related to equities and commodities making up seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly influence this structure. While anyone can launch a HIP-3 market as long as they adhere to protocol requirements, a deployer using Star Gating may limit trading in their market to authorized wallets.
This mechanism allows an operator to combine public blockchain settlement with identity verification, location restrictions, or other account-specific regulations. It remains unclear whether such features will be implemented on the mainnet and under what conditions.
Kraken’s Strategy in Regulated and Blockchain Markets
The connection with the testnet has attracted attention, particularly as Kraken and its parent company, Payward, have been progressing throughout 2026 to incorporate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began trading U.S. stocks for eligible clients within the European Economic Area. This offering includes over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Offering traditional stock services is Payward Europe Digital Solutions, an investment firm located in Cyprus, licensed under the EU’s MiFID II regulations. Kraken reported that xStocks have generated more than $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. Following this, Kraken enabled eligible clients outside the U.S. to use certain xStocks as collateral for futures and margin positions.
Payward also aims to expand its offerings beyond U.S. equities. After a partnership with trading infrastructure firm GTN in July, it plans to include shares from Hong Kong, eventually extending to the UK, Europe, South Korea, and other regulated markets, depending on local regulations.
Devens pointed out Hyperliquid’s initiatives related to xStocks and Payward’s recent activities as potential indicators of a link to Kraken during the testing phase. However, her findings are speculative, largely based on names and timelines rather than confirmed data from either entity.
U.S. Derivative Regulations May Limit Accessibility
For users in the U.S., a permissioned HIP-3 deployment does not automatically ensure legal access to on-chain perpetual contracts. Generally, commodity derivatives offered to American retail investors must be supplied by firms registered with the Commodity Futures Trading Commission.
