Paragon Tests HYPE Squared Power Perps on Hyperliquid

Paragon, the builder operating under Hyperliquid's HIP-3 framework, began testing Power Perps on November 4-5, 2026, opening with a HYPE² market that tracks the square of HYPE's price. The contract offers uncapped, options-style upside with no strike price and no expiry, settled through hourly funding.

The index mechanics are simple: it multiplies the price of HYPE by itself. That squaring produces a convex payoff. On a standard perpetual, each dollar HYPE gains adds a fixed dollar to a position. On HYPE², each incremental dollar move in HYPE lifts the index by progressively more than the last.

Paragon's research puts a number on the effect. A 20% rise in HYPE translates into roughly a 44% gain in the HYPE² index, before funding fees. The same convexity works in reverse: drawdowns accelerate at the same rate.

How does the product replace options mechanics?

Traditional options deliver convexity but carry operational overhead. Traders pick a strike, choose an expiry, and absorb time decay until the contract dies on a set date.

Power Perps strip that structure away. There is no strike and no expiry — only a perpetual contract kept tethered to its index through hourly funding payments, where holders pay or receive to keep the market anchored.

That design consolidates liquidity. Instead of order books scattered across dozens of strikes and expiry dates, everyone trading HYPE² meets in a single book — a structural difference comparable to how spot markets concentrate volume that options chains fragment.

Paragon did not build the concept from scratch. The product draws on earlier research into power perpetuals by Dan Robinson, Dave White, and Andrew Leone, and applies lessons from Opyn's Squeeth, which ran the same squared construction on ETH.

What are the liquidation risks?

Leverage compounds the convexity in both directions. A squared index already moves faster than its underlying asset, and stacked leverage amplifies that speed further.

The research flags a specific threshold: a 2× long position on HYPE² gets liquidated after HYPE falls by about 22.5% — before funding fees are counted. That figure sets a tighter risk budget than a comparable leveraged position on the linear HYPE perp.

Where does the rollout stand?

As of mid-November 2026, the rollout remains in its early stages, and Paragon's own messaging describes the product as being tested. The official site indicates a HYPE³ market is coming soon, which would cube the price and push convexity, and liquidation risk, even higher.

Paragon operates through HIP-3, the framework that lets builders deploy their own perpetual markets on Hyperliquid. That structure lets experimental products plug into Hyperliquid's existing infrastructure rather than launch on a standalone exchange.

Market makers may see the most practical upside. According to the research, the design lets them hedge HYPE² exposure using the spot and linear perp markets already live on Hyperliquid, all within the same venue — removing the cross-exchange legging risk that usually accompanies exotic payoffs.

Whether HYPE² graduates from testing to a fully supported market, and whether HYPE³ follows it, will show how far Hyperliquid's builder-deployed derivatives framework can stretch beyond linear contracts.