Should Hyperliquid Be Worth More Than XRP or Ethereum?

Most investors will eventually confront the issue of how much value they're actually getting when they buy a crypto token. For most coins, the answer to that question is vague.

But Hyperliquid (CRYPTO: HYPE) is different: Its protocol generates about $714 million in annualized fees thanks to the trading activity on its decentralized crypto exchange, and it routes roughly 99% of those fees toward open-market buybacks of its native Hype coin via an automated mechanism. Since its launch in late 2024, more than $1.1 billion has gone toward repurchases.

In comparison, Ethereum (CRYPTO: ETH), with a market cap near $250 billion, and XRP (CRYPTO: XRP), at more than $80 billion, are both much larger than Hyperliquid, which has a cap of about $15 billion. But the smaller asset might be significantly undervalued. Let's do a quick investigation and figure it out.

Image source: Getty Images.

This buyback machine is competing against fee-challenged giants

Given Hyperliquid's annualized fees of $714 million and its current market cap, it has an implied price-to-sales ratio (P/S) of near 20, which is quite reasonable for a fast-growing tech company.

In 2025, the total fees generated by protocols operating on Ethereum's chain exceeded $6.2 billion, but almost none of that value flows to Ethereum holders. The chain's own revenue, the portion of gas (user) fees that are automatically destroyed rather than paid out to the network's validators and stakers, came to only about $93 million. The result is a P/S multiple of 2,677, a staggering figure for a network whose fee economics are under growing scrutiny despite (or perhaps because of) its gas fees falling by 99% during the past five years.

So, the amount of Ether coins that will be burned by future transactions on the chain will likely not be a major driver of returns for holders as the chain scales up even further and forces the average paid fee per transaction even lower. Of course, Ethereum is still probably a fairly valuable network since it's the home to more than $42 billion in decentralized finance (DeFi) value.

In contrast, fees on the XRP Ledger (XRPL) are intentionally designed to be negligible to incentivize financial institutions to use the network with vast sums of capital, and its fees are burned rather than distributed. For instance, on May 26, it only incurred $536 in transaction fees. As a result, it isn't meaningful to calculate a P/S, as it would be even more comically high than Ethereum's.

Thus, XRP's value, to the extent it exists, rests on how well the actions of its issuer, Ripple, can convince investors that the coin is going to increase in value.

Therefore, on the basis of tokenomics alone, the case for Hyperliquid being worth more than XRP or Ethereum is hard to rebut.

Where the comparison falls apart

If we expand our valuation discussion to be a bit wider than tokenomics alone, Hyperliquid is still very promising, but its immaturity compared to Ethereum and XRP starts to look like an impediment to its valuation in the near term.

Hyperliquid is expanding, having launched its Ethereum Virtual Machine (EVM) compatible smart-contract environment in early 2025, enabling it to run smart contracts. And it recently rolled out the capability for native prediction markets. Its DeFi layer remains small, with just $1.7 billion in value, and because it only has $6.8 billion in stablecoins on its chain, it will probably continue to depend on Ethereum's infrastructure for both its liquidity as well as its smart-contract tooling.

When crypto enters a downturn, trading activity on Hyperliquid's platform will likely fall, causing its pace of buybacks to slow. Ethereum and XRP will experience the same issue of lower activity leading to even less burning of their coin supply, but the effect won't matter much because the amounts being burned were proportionally very small to begin with.

Against XRP, Hyperliquid's valuation case is stronger because it offers measurable economic returns linked to the network's utilization that XRP simply cannot match. Hyperliquid should probably be worth more than XRP.

Against Ethereum, however, the argument is harder to make since Ethereum's moat is its ecosystem rather than its fee structure, and that moat remains very formidable. But regardless of where Hyperliquid ranks, its fee economics earn it a serious look.

Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum, Hyperliquid, and XRP. The Motley Fool has a disclosure policy.