This report was written by Hyperliquid India and first published on X on 7 August 2026 (read the original). We are sharing it here with full credit to the team.

India is one of the world's largest trading markets. Its listed equity market is worth about $5 trillion, NSE ranks among the world's largest derivatives exchanges, and India topped Chainalysis' 2025 Global Crypto Adoption Index.

Access, however, has not kept pace with demand, as investors increasingly look for global assets and 24-hour markets, while India remains fragmented by legacy rules and rails.

This report examines why traders continue moving offshore and what role on-chain infrastructure could play to change that.

How India’s Equity Market Works Today

India’s market is large, retail-heavy, and increasingly funded by domestic capital.

Understanding it requires looking beyond the headline numbers to who drives trading, where capital comes from, and how the market is structured.

India Has Market Scale, but Limited Trading Depth

India’s listed equity market was worth about $4.97 trillion in April 2026, making it the fifth largest in the world, although Hong Kong still had more listed value.

After NSE introduced weekly index options in 2019, retail traders could take leveraged positions on the Nifty with only a few hundred rupees, and adoption followed at a scale few markets have matched.

Retail’s share of India’s derivatives volume grew 20.5 times, from 2% in 2018 to 41% today.

NSE was the world’s largest derivatives exchange by contract count for most of the past six years, briefly losing the title to Brazil’s B3 in 2025 before regaining it in 2026.

Contract count, however, makes India’s market look deeper than it is. CME trades far fewer contracts each day but earns about $6.5 billion at margins above 60%, reflecting larger contracts and greater institutional activity, while NSE’s FY25 revenue of about ₹17,141 crore depends more on volume than value.

The regulator’s own data shows the cost of this structure. Individual traders lost a net ₹1.06 lakh crore in equity derivatives in FY25, and about 91% ended the year with losses.

SEBI has tightened the market since October 2024 by raising minimum contract sizes to ₹15 lakh to ₹20 lakh, limiting each exchange to one weekly expiry, and requiring option premiums to be collected upfront.

Why Retail Traders Keep Returning to Options

A product that loses money for 91% of its users should struggle to retain them, yet India’s derivatives market keeps growing.

• Low entry costs are part of the reason. A weekly Nifty option can cost only a few hundred rupees, making it feel to many retail traders more like a lottery ticket than a leveraged financial position.
• Outcomes are also heavily skewed, so a small number of large wins can keep traders engaged even when most lose. SEBI found that only 7.2% of traders were profitable over three years.
• The counterparty is mostly invisible, with SEBI data showing that proprietary firms and foreign portfolio investors capture almost all profit in the segment while running algorithms against retail traders who cannot see who is on the other side. In July 2025, SEBI barred Jane Street and impounded about ₹4,844 crore over alleged expiry-day index manipulation.

Who Controls the Domestic Markets

NSE accounts for about 85% of cash equity turnover and 94% of derivatives activity, while BSE leads by number of listed companies.

The depository market tells a similar story. CDSL has become the primary gateway for retail investors, with 185.9 million investor accounts as of June 2026, nearly four times NSDL's 46.2 million active accounts.

Yet NSDL continues to safeguard a much larger share of India's financial assets, holding about ₹547.8 lakh crore of securities in custody compared with CDSL's roughly ₹88.3 lakh crore.

Together, they show how India's equity market has expanded rapidly at the retail level while a significant share of institutional wealth remains concentrated within NSDL.

Retail broking is equally concentrated, with the top four firms holding 63% of active NSE clients in FY25 while Groww passed Zerodha and reached about 29% market share by mid-2026.

Zerodha earns net margins in the mid-50% range, with about 55% of revenue coming from derivatives, which is also the business SEBI is trying to compress.

Domestic Investors Are Replacing Foreign Capital

Foreign portfolio investors sold a record ₹1.6 lakh crore of Indian equities in 2025, followed by ₹2.8 trillion in the first half of 2026, the largest half-year outflow on record, while their share of the Nifty fell to a fourteen-year low of about 14.7%.

Domestic institutions absorbed much of that selling as monthly systematic investment plan inflows rose above ₹31,000 crore, helping them buy a record ₹4.3 trillion in the same period and, for the first time, own more of the Nifty than foreign investors.

India’s Crypto Market Has Outgrown Its Rules

The same appetite for leverage and global markets extends into crypto, but the policy framework is far less settled.

India taxes virtual digital assets heavily and applies anti-money-laundering rules to service providers while key questions around classification, derivatives, and market access remain unresolved.

Crypto Is Taxed Before It Is Clearly Regulated

In April 2018, the Reserve Bank barred regulated banks from serving crypto businesses, a move that stopped short of banning crypto trading but removed the banking rails supporting it.

The Supreme Court struck down the circular in March 2020 after finding that the central bank had not shown the restriction to be proportionate to the harm.

Two years later, the Finance Act of 2022 classified crypto as a virtual digital asset, taxed gains at 30% without allowing losses to be offset, and added 1% TDS on trading and transfers under Section 194S from July 2022.

In March 2023, India brought crypto service providers under the Prevention of Money Laundering Act, effectively making the Financial Intelligence Unit, or FIU, the sector’s regulator by default.

The result is a regime that taxes crypto heavily while policing the sector through anti-money-laundering law.

The asset itself, however, remains poorly defined. Rajya Sabha MP Raghav Chadha captured the contradiction in Parliament in February 2026, arguing that India taxes virtual digital assets as if they are legal while regulating them as if they are illegal.

Tax Rules Pushed Crypto Trading Offshore

India taxes crypto gains at a flat 30% without allowing losses to be offset, but the 1% withholding tax has had a larger effect on trading activity.

Section 194S applies a 1% tax to transfers and trading of virtual digital assets, including spot trades, while its application to derivatives remains unclear. Traders responded by shifting activity toward products and venues where the tax was easier to avoid.

More than 80% of Indian crypto exchange volume is now in futures and perpetuals, a reversal from the pre-2022 market when spot trading dominated and one that helped businesses such as Pi42 and Delta Exchange grow.

The tax also pushed activity offshore. The Esya Centre estimates that about 90% of Indian crypto trading now takes place outside the country, while a separate KoinX analysis found a 72% to 73% exodus linked to ₹51,252 crore.

Because the studies use different data and time periods, the figures should not be combined, but both point to the same broad shift.

Enforcement has been real but not decisive to build market confidence. The FIU has collected about ₹28 crore in penalties and blocked 25 unregistered platforms, while the largest offshore venues largely registered and continued operating.

Binance paid $2.2 million and returned to India, while Coinbase launched rupee rails on 1 June 2026. Domestic exchanges cannot match offshore pricing or waive the tax, so they have turned to survival economics, with WazirX launching a ₹99 monthly unlimited plan and CoinDCX testing zero-fee trading.

India’s position shifted twice in July.

On 2 July, RBI Deputy Governor Rohit Jain and Executive Director P. Vasudevan spoke to the Standing Committee on Finance. They said the central bank favours containment. That would keep banks and regulated firms away from crypto and private stablecoins. It would also deny them legal-tender status and preserve prohibition as an option.

On 23 July, the Committee tabled its report on the Securities Markets Code. It recommended an interim framework for virtual digital assets through recognised self-regulatory organisations supervised by SEBI or the RBI. This is the first concrete regulatory structure India has put on paper. A separate VDA study is still pending in the current session.

India’s Crypto Trader Base Is Getting Younger and Broader

According to the India Web3 Landscape Report 2025, based on data supplied by Indian crypto exchanges, users aged 18 to 25 represented 37.6% of active investors but generated 50% of trading volume. Users aged 26 to 35 accounted for another 37.3% of the investor base.

The same report also found that users aged 18 to 25 rose from 24% of new derivatives traders in 2024 to 61% in 2025, while average trade size increased from $1,051 to $1,960 and the share of users trading daily climbed from 45% to 60%.

These are exchange-level figures rather than estimates for the entire Indian market, but they indicate that younger traders are entering crypto derivatives markets with high levels of activity, the same behaviour we’ve seen in equity derivatives markets.

Participation is spreading beyond major financial hubs, with the 2025 report showing growth in Eastern India, the Northeast, and the south, although capital remains concentrated in Delhi-NCR and nine Tier-1 and Tier-2 cities that account for 64% of invested value.

Women still represent only about one in eight traders, but their participation in crypto derivatives grew by 20% in 2025.

Why Indian Investors Look Beyond Domestic Markets

Offshore demand is not only a crypto story, because currency depreciation gives investors a standing reason to hold dollar assets while existing routes to US and global markets still impose limits through market hours, remittance processes, reporting requirements, and conversion costs.

A Weaker Rupee Makes Dollar Assets More Attractive

As of August 2026, the Nifty 50 was broadly unchanged over one year and up about 51% over five years, while the Sensex was down about 3% over one year and up about 45%.

Over the same period, the S&P 100 returned nearly 88%, and the rupee depreciated by about 9% against the US dollar over the past year and more than 28% over five years.

For Indian investors, dollar assets can benefit from both market returns and currency appreciation. Over the past five years, the S&P 100 returned nearly 88% in dollar terms, which translates to roughly 141% in rupee terms before fees and taxes.

The point is not that US markets always outperform India. It is that currency movements make global assets more attractive even when expected market returns are similar.

How Indians Access US Markets Today

India already offers several routes into US markets, but each has trade-offs.

Platforms such as INDmoney, Vested, and Groww let investors open US brokerage accounts under the Liberalised Remittance Scheme, while GIFT City offers a regulated, dollar-based trading venue inside India’s financial system.

These options expand access without removing the main friction, as users still face remittance paperwork, overnight market hours, foreign asset disclosures, and currency conversion costs of about 1% to 3%.

Local Exchanges Are Moving Toward Global Assets

Indian crypto exchanges have also started responding to demand for global markets by expanding beyond digital assets.

In early 2026, CoinDCX launched US stock perpetual futures, allowing users to trade price movements in major US companies through an INR/Crypto interface.

These products do not provide ownership of the underlying assets, but they show that Indian platforms increasingly see demand for global market exposure alongside crypto trading.

Even so, they continue to operate within centralized exchange models. Users cannot independently verify the order book, market depth, or how trades are matched. They also remain subject to local regulatory constraints instead of operating on open, on-chain markets.

Why India Needs Hyperliquid

The opportunity is not simply to give Indian traders another venue, but to change what a financial company needs to build before it can offer global markets.

Traditional exchanges are vertically integrated. The operator owns the matching engine, controls the order book, selects the assets, and keeps the final record of every trade.

Hyperliquid uses a different model, running a fully on-chain central limit order book on a purpose-built Layer 1 blockchain where orders, trades, liquidations, and other market activity are recorded on-chain. Even with that architecture, the system delivers exchange-level performance with almost 200,000 orders per second and one-block finality.

This architecture creates four capabilities that conventional exchanges struggle to offer:

• Shared liquidity across every application built on the network.
• Permissionless development, so others can build exchanges, brokerages, and trading apps on the same infrastructure.
• Auditable execution, so each order and trade can be checked independently.
• Transparent economics, with protocol revenue, buybacks, and treasury activity visible on-chain.

Hyperliquid is therefore less an exchange than a public infrastructure.

Why Traders Use Hyperliquid

During 2025, competitors used zero-fee trading, token rewards, and incentive campaigns to gain market share, which moved trading volume far more than it moved capital.

Hyperliquid continued to hold the largest share of open interest across perpetual DEXs for much of the year, often accounting for more than half of the market.

• Effective trading costs. Hyperliquid charges a 0.045% taker fee and no GST, while Indian players like Delta advertise a 0.05% fee that rises to about 0.059% after GST. Pi42 also charges GST separately.
• Market coverage. HIP-3 lets anyone launch perpetual markets, giving traders access to crypto, equities, commodities, foreign exchange, ETFs, and pre-IPO companies from a single order book.
• Liquidations. Hyperliquid first liquidates through the order book, with HLP acting as a backstop only when needed. Unlike Pi42 and Delta, it charges no liquidation clearance fee.
• Funding. Hyperliquid settles funding directly between traders without taking a fee, while publishing the rate and inputs on-chain so the calculation can be independently verified.

Where Protocol Revenue Comes From

The figures below come from hl.eco and cover data through 2 August 2026.

Since December 2024, Hyperliquid has generated $1.22 billion in protocol revenue, still led by native crypto perpetuals but increasingly supplemented by spot trading, HIP-3 markets, auctions, and HyperEVM activity.

All-time protocol revenue

• Native perpetuals: $1.1B, 90.7%
• Spot: $45.3M, 3.7%
• HIP-3 perpetuals: $22.4M, 1.8%
• Spot auctions: $20.6M, 1.7%
• HyperEVM gas: $13.4M, 1.1%
• Priority and HIP-3 auction fees: $11.3M combined

Note: Gross fees and protocol revenue are not the same. Traders have paid $1.30 billion in total fees, of which $115.90 million went to builders and deployers rather than Hyperliquid.

Over the trailing twelve months, Hyperliquid generated $900.91 million in gross revenue and $776.81 million in operating net income, equal to an operating margin of 86.2%.

Trailing twelve-month economics

• Native perpetuals: $702.45M
• Builder-code fees: $79.45M
• Spot trading: $35.44M
• HIP-3 perpetuals: $22.39M
• HIP-3 deployer fees: $20.98M
• Spot deployer fees: $14.30M
• HyperEVM gas, priority fees, and auctions: $25.90M combined

The cash-flow model is unusually direct, with about 99% of eligible trading-fee revenue going to HYPE buybacks while priority fees, auction fees, and HyperEVM fees are burned.

For the exact-fills period tracked since July 2025, the Assistance Fund bought $739.40 million of HYPE against $767.74 million in measured trading-fee revenue, equal to a realised buyback rate of 96%.

HIP-3: Anyone Can Deploy a Market

HIP-3 allows anyone who stakes 500,000 HYPE to launch a perpetual market on Hyperliquid.

The deployer chooses the asset, oracle method, leverage limits, open-interest caps, and settlement process, while Hyperliquid supplies the matching engine, order books, margin system, and more.

The markets are launched via Dutch auction and deployers can keep up to half of the trading fees from their markets.

HIP-3 ecosystem, as of 3 August 2026

• $448.69 billion in all-time volume
• $56.23 million in all-time fees
• $3.66 billion in open interest
• 190+ markets

HIP-3 markets averaged 45.6% of Hyperliquid’s perpetual volume over the previous 30 days, reached an all-time peak of 75.2%, and accounted for about 35% of total perpetual open interest.

Deployers have launched markets across equities, indices, commodities, foreign exchange, exchange-traded funds, and pre-IPO companies.

Continuous trading matters most when traditional venues are closed, as shown during the February 2026 escalation in Iran when crude oil kept trading on Hyperliquid through the weekend while conventional commodity markets were shut.

HIP-3 also supports price discovery before a public listing. For Cerebras and SpaceX, perpetual prices finished within 2.24% and 5.06% of their Nasdaq opening prices, while the difference across recent debuts ranged from 0.44% to 7.23%.

HIP-4: Trading Outcomes

HIP-4 expands Hyperliquid beyond asset prices into event outcomes, with each market defining its possible outcomes, expiry, and source for final resolution.

Traders buy and sell outcome tokens through HyperCore’s order book, and at settlement the winning outcome pays 1 while all others pay 0. Because positions are fully collateralised, there is no leverage or liquidation.

Markets can have two outcomes or several, covering events such as Federal Reserve decisions, inflation releases, crypto prices, and football matches.

HIP-4, as of 3 August 2026

• $400.36 million in all-time volume
• 7 million fills
• 4 million trades
• 16,400 lifetime traders

Sports account for 51% of categorised volume and 52 of the 55 live markets, with World Cup fixtures making up most of the current set.

Validators still control deployment and settlement, although broader deployment is planned, but the larger change is that builders can launch event markets without building a separate prediction-market exchange.

Permissionless Distribution With Builder Codes

Builder Codes let third-party apps route orders through Hyperliquid and earn fees from the activity they bring.

A builder needs at least 100 USDC in perpetual account value and must use standard account abstraction mode, but there is no application, approval process, or commercial agreement with Hyperliquid.

Users approve a maximum fee for each builder and can revoke access at any time, with the fee added to each order and processed on-chain. Fees are capped at 0.1% on perpetual trades and 1% on eligible spot trades.

Builder Code ecosystem, as of 3 August 2026

• $92.88 million in total builder revenue
• $140.54 billion in cumulative routed volume
• 440,000 traders onboarded
• 388 active builders
• 11.2% average share of Hyperliquid volume over the past 30 days

Phantom leads cumulative routed volume with 28.3%, followed by Based at 10.1%, Axiom at 9.1%, Insilico at 8.9%, TreadFi at 7.5%, and MetaMask at 6.0%.

In simple terms, builders control the interface and the user relationship while Hyperliquid provides execution and liquidity.

What India Can Build on Hyperliquid

India already has what most markets spend years trying to build:

• One of the world's largest retail trading populations.
• Mature digital payment infrastructure.
• Financial companies that know how to acquire and serve millions of users.

The demand is already there, and earlier in this report, we showed that Indian traders are moving toward global markets, crypto trading has shifted offshore, and dollar assets have become more attractive as the rupee has weakened.

Building another exchange is unlikely to solve that problem because liquidity is hard to attract and even harder to sustain.

We see two possible models, and they can coexist.

A Self-Custodial Layer for Indian Traders

One option is a wallet or trading app built by a local Indian player that makes Hyperliquid easier to use while users keep control of their accounts.

Builders can focus on making the experience native to Indians by enabling INR onramping and removing friction in how users enter and exit the system. This could include:

• Wallet creation and recovery
• INR deposits, onramping, and stablecoin bridging
• Market discovery and order entry
• Portfolio and margin tracking
• Transaction history and tax exports
• Customer support tailored to Indian users

Hyperliquid provides execution and liquidity, while builders own the product and customer relationship.

Because users control their wallets, funds never sit on the builder's balance sheet, withdrawals do not require approval, and accounts remain portable across compatible applications.

Users remain responsible for wallet security, leverage, stablecoin access, and tax reporting, while execution still depends on Hyperliquid.

A Fully Regulated FIU-Compliant INR Gateway

The second model is a fully regulated Indian platform that operates as a FIU-IND registered Virtual Digital Asset Service Provider (VASP), connecting users to global markets while providing INR on-ramps, compliance, reporting, and customer support in line with Indian law.

In this structure, the platform functions as a compliant intermediary between Indian users and offshore liquidity venues, ensuring all activity is traceable, reported, and aligned with applicable regulatory requirements.

Depending on the regulatory framework and approvals obtained, it could offer:

• FIU-IND compliant onboarding with full KYC and ongoing due diligence
• INR deposits and withdrawals through regulated banking partners
• Transaction monitoring, surveillance, and AML controls
• Tax reporting, including capital gains computation and TDS handling where applicable
• Regulatory disclosures aligned with Indian financial and digital asset guidelines
• Customer support and dispute resolution mechanisms within India
• Integrated wallet management with clear segregation of user assets and platform operations

This model does not require the platform to take proprietary trading risk, but it does require full compliance responsibility for user onboarding, fund flows, reporting, and monitoring.

Custody can be structured either through regulated custodial partners or through non-custodial architectures, provided compliance obligations are met at the platform layer.

Existing exchanges already operate with banking relationships, compliance teams, and large user bases, giving them a natural advantage in adopting this model.

New entrants, however, can also build compliant interfaces on top of global liquidity networks, provided they integrate FIU registration, reporting systems, and banking partnerships from the outset.

In this structure, Hyperliquid serves as the underlying market infrastructure, while Builder Codes enable regulated Indian platforms to earn revenue transparently from the trading activity they originate.

TLDR; India

India does not need to recreate Hyperliquid. The opportunity is to build Indian interfaces, INR payment rails, reporting systems, compliance tools, and customer experiences on top of shared global liquidity.

Indian users will access these markets regardless of domestic participation. If Indian firms do not build the interface layer, offshore platforms will capture the users, revenue, and product control.

Written by Uddalak Das (@ninja_writer21)

Download the report: https://docsend.com/v/tpnqt/hyperliquid-india-state-of-indias-trading-ecosystem-report-2026

Disclaimer: Hyperliquid India is an independent community of Hyperliquid users. It is not affiliated with Hyperliquid or the Hyper Foundation and is not authorised to represent either. Nothing in this report is investment, legal, or tax advice.

About Hyperliquid India

Hyperliquid India is the local Hyperliquid community in India. They run meetups across the country, from Gurugram and Bengaluru to Mumbai, and publish research like this report. Follow them on X at @Hyperliquid_In and join their Telegram group.

Listings and research on hypurr.co are for information only and are not financial advice.