Kraken to Explore Development of HIP-3 Compliant Decentralized Exchange Leveraging Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has granted permission to ten wallets for testing and evaluated three out of five compliance controls. This suggests that the centralized exchange may be considering a permissioned HIP-3 market.
Summary
- Twelve wallets were approved for test deployment through a gating mechanism.
- Three of the five compliance controls are currently under evaluation, with successful implementations including mandatory position reductions and collateral transfers.
- As of now, Kraken has not publicly acknowledged its ownership or involvement in the testnet deployment.
- HIP-3 permits external developers to create perpetual markets using Hyperliquid’s trading framework.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer referred to as “Kraken HIP-3 test DEX” initiated a permissions system called Star Gating on Hyperliquid’s testnet starting August 19.
This deployment has successfully added ten wallets to its list of approved users and assessed three of the five compliance controls mentioned on the testnet, according to Devens. Additionally, a validator has been registered under the designation “Kraken Exchange Validator.”
Unverified Connection Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been enhancing testnet features to support regulated or licensed participants. In addition to wallet whitelisting, new functionalities allow a deployer to cancel users’ open orders, close positions through reduce-only orders, and handle collateral transfers.
In contrast to traditional user-initiated trades, every action grants the deployer direct control over an account or position. This model enables operators to utilize these capabilities to restrict access, ensure compliance with legal requirements, mitigate risks, and withdraw funds as needed.
Such mechanisms are commonplace in centralized exchanges, where account access relies on identity verification and compliance protocols. Their application in HIP-3 could support a permissioned market while still leveraging Hyperliquid’s on-chain order book and settlement system.
In her assessment, Devens speculated that Kraken might become “the first compliant HIP-3 deployer,” but emphasized that mentioning the name does not confirm Kraken’s involvement. Hyperliquid’s testnet facilitates permissionless deployments, meaning any independent user could create a market or validator using the exchange’s branding.
As of this report, neither Kraken nor Hyperliquid has publicly acknowledged any collaboration or testing. Current information points to a Kraken-branded deployment using the new controls, but it does not definitively confirm Kraken as the developer.
Exploring the HIP-3 Framework by Hyperliquid
HIP-3, or Hyperliquid Improvement Proposal 3, allows independent developers to manage perpetual futures markets using HyperCore, the network’s trading engine. HyperCore provides the order book, matching system, margin functionalities, and liquidation processes, while each deployer defines their market rules and trading conditions.
Previous reports from crypto.news have highlighted that HIP-3 was officially launched on the mainnet on October 13, 2025. To operate independently as a perpetual exchange without requiring approval from Hyperliquid’s core team, a builder must stake 500,000 HYPE.
Deployers have the authority to specify listed assets, price oracles, collateral requirements, margin conditions, leverage limits, and funding terms. 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 violates oracle usage rules or market regulations, and this requirement is enforced for 30 days following the closure of the operator’s market.
Markets established under HIP-3 allow the deployer to retain 50% of the fees collected. A report from July 3 indicated that open interest in HIP-3 exceeded $1.43 billion, with contracts linked to equities and commodities making up seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly impact this structure. While anyone can launch a HIP-3 market as long as they meet protocol conditions, a deployer utilizing Star Gating may limit trading on their market to approved wallets.
This setup allows an operator to combine public blockchain settlement with identity verification, location restrictions, or other account-specific regulations. It remains uncertain whether such features will be accessible on the mainnet and under what conditions.
Kraken’s Strategy in Regulated and Blockchain Markets
The association with the testnet has drawn interest, particularly as Kraken and its parent company, Payward, have been advancing 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 encompasses over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Providing traditional stock services is Payward Europe Digital Solutions, an investment firm based in Cyprus, licensed under the EU’s MiFID II regulations. Kraken reported 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. Following this, Kraken enabled eligible clients outside the U.S. to use select xStocks as collateral for futures and margin positions.
Payward also aims to expand its offerings beyond U.S. equities. After an agreement 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, pending local regulations.
Devens pointed out Hyperliquid’s undertakings related to xStocks and Payward’s recent endeavors as potential indicators of a link to Kraken during the testing phase. However, her conclusions remain speculative, primarily 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 automatically ensure legal access to on-chain perpetual contracts. Generally, commodity derivatives offered to American retail investors must be provided by firms registered with the Commodity Futures Trading Commission.
