Paragon Tests Squared HYPE Perp on Hyperliquid (HYPE): 20% Move Equals 44% Index Gain

Paragon Ships HYPE2 as First Power Perp

Paragon is testing Power Perps on Hyperliquid, and its first market tracks the square of the Hyperliquid (HYPE) price. In the worked example from Paragon's product materials, a 20% rise in HYPE lifts the HYPE2 index by 44% before any funding fee is applied. The rollout began around Nov. 4-5, 2026, with HYPE2 listed as the opening market, and Paragon's product page describes Power Perps as a line in testing, without a published date for full release.

A Power Perp is a perpetual future tied to a power of an asset's price rather than the price itself. Paragon's technical documentation states that the index is built by squaring the underlying price and dividing it by a constant fixed at launch, a step that sets the index's starting value equal to the underlying price. The constant does not mean the token price itself doubles; it only anchors where the index begins. A standard perpetual gains a fixed amount of value for every increment in the underlying. On HYPE2, each further increment matters more than the last, because the square of a larger number grows faster, so exposure to HYPE takes on a nonlinear shape that plain tokenomics alone do not describe.

The design rests on earlier research. Paragon's documentation cites work by Dan Robinson, Dave White and Andrew Leone, and Opyn's Squeeth, an earlier squared ETH product from the DeFi 2.0 era that applied the same method to Ethereum. Unlike an option, the contract carries no strike price and no expiry, and traders post margin rather than paying an upfront premium, with funding changing hands every hour. Where options split liquidity across many strikes and expiries, the design gathers all trading for one underlying into a single order book, which Paragon says can ease that fragmentation.

Funding and liquidation carry most of the practical risk. The base funding rate is set from the underlying asset's recent volatility, the funding on a standard perpetual and the contract's power level, and the final rate also moves with how far the contract price sits from the index. When the contract trades far enough below the index, the payment direction flips and shorts can collect from longs.

Paragon's own liquidation math is stated in its documentation. A 2x long on HYPE2 reaches maintenance margin after a fall of roughly 22.5% in HYPE, and a 3x long after roughly 10.6%, on the assumption that the contract tracks its index with no added collateral, no offsetting positions and no funding in the picture. Real thresholds shift with collateral, other positions in the account and funding paid along the way.

A fully collateralized 1x long is not liquidated by a price drop alone, though funding payments or losses elsewhere in a cross-margin account can erode its backing; a 1x short can be liquidated. A HYPE3 market also appears on Paragon's product page, where the same 20% rise maps to a 72.8% index move before funding and leverage. The product operates under the Hyperliquid HIP-3 framework, which lets external developers deploy perpetual markets, define contract terms and set the oracle. Paragon has used that auction route before, winning the GDX ticker, a code reservation on the platform rather than a purchase of ETF shares. Market makers can hedge Power Perp positions with HYPE spot and standard perps, an approach Paragon describes as possible rather than measured, and the venue's execution mechanics are laid out in How to Trade on Hyperliquid.

A 3x Long Liquidates Near 10.6%

The squared math cuts both ways. In a bull market, acceleration compounds faster than any linear perp, and the same mechanics shorten the road to liquidation in a drawdown, which is why the 10.6% figure for a 3x long matters more than the 44% upside example. The market is in test form, so real volume, funding behavior and hedge execution on HYPE2 remain unproven, and attention on the venue has previously centered on leveraged positions such as a $5.44M NVIDIA short. The liquidation figures here are not FUD but the issuer's own numbers, and the levels governing the underlying itself are tracked in our Hyperliquid technical analysis. Until the product leaves testing, Paragon's documentation, with its 44%, 72.8%, 22.5% and 10.6% figures, is the only firm ground.