Ethereum should take this lesson from Hyperliquid

App builders are quietly making millions building on top of platforms like Hyperliquid and Polymarket by tapping into a new type of revenue attribution system called “builder codes”.

It’s the Roblox model for crypto; where platforms acts as the foundation for thousands of apps to build and earn on top - using unique codes to attribute activity and distribute payouts.

In this post, I’ll break down what builder codes are, how apps are printing millions from them, and how ERC-8021 proposes to bring this system natively to Ethereum.

What are builder codes?

Builder codes are simply referral codes but for app builders - apps can utilize them to earn money for generating volume on another platform, e.g. Hyperliquid.

This creates an on-chain attribution system where third-party apps like trading bots, ai agents, and wallet interfaces can earn fees for the activity they generate on another platform.

This is mutually beneficial for all parties:

• Platforms gain more volume.
• App developers earn money for the volume they generate.
• Users get more convenient ways to interact with platforms.

Let’s look at an example - Phantom.

Phantom’s perps printer

In July, Phantom added support for perps trading using Hyperliquid’s builder codes; a decision currently earning them roughly ~$100k USD per day in revenue.

It works by allowing users to transfer their money to a separate perps account; where they can place long & short orders directly within the mobile app.

On each order, Phantom attaches their builder code to take a 0.05% fee from users - which is attributed on-chain and claimable in USDC.

Phantom attaches their builder code to “tag” their user’s orders coming from the Phantom wallet app and earn their fees.

Keep in mind, this is all powered by external APIs offered by Hyperliquid - making it extremely low lift compared to building something of similar complexity in-house,.

Phantom’s perps have already produced pretty crazy ROI - since launching in July, Phantom has done nearly $20B in perps volume, earning them close to $10M in revenue in just under 6 months.

Phantom made nearly $150K in revenue yesterday alone from perps

Interestingly, Phantom’s top perps user has performed horrendously:

• Lost 99% of their ~$2M perps portfolio.
• Has a P&L of -$1.8M.
• Has paid ~191K in fees to Phantom via builder codes.
• Their only open position currently is a 25x ETH long (do what you will with that information).

Unless everyone runs out of money like this guy, Hyperliquid will continue to print money for developers like Phantom bringing volume to their platform.

To date, Hyperliquid builder codes have:

• Earned app builders nearly $40M in revenue.
• Provided a variety of better user interfaces to trade perps.
• Generated over $100 BILLION in additional perps volume for Hyperliquid!

It’s been proven very quickly that this model works, and it attracts talented app developers to build high-quality apps on-top of Hyperliquid.

Polymarket following suit

This week, Polymarket announced a similar design for their Builders Program, rewarding app builders for bringing volume to Polymarket’s prediction markets.

To bootstrap Builder Codes integrations, we are launching a weekly USDC rewards program for builders, based on integration volume.

While the volume from third-party Polymarket apps are currently of magnitude lower than Hyperliquid, their builder codes are already attracting teams to build user interfaces that offer users unique ways of predicting.

Over $50M in betting volume has been placed through third-party Polymarket apps

Polymarket seems to be helping amplify builder apps ranging from trading terminals to AI assistants, and has created Hyperliquid-esque dashboards to showcase top builders and their rewards.

I suspect we’ll see other prediction markets make similar programs to compete, and likely a broader ecosystem of apps copy this style of referral system after its success.

But Ethereum has the opportunity to take this to the next level, and encourage high-quality app builders to create innovative interfaces built on-top of tried and true Ethereum platforms.

ERC-8021 & Ethereum’s Opportunity

Ethereum now has the opportunity to integrate builder codes natively into L2s and the L1 directly - and a recent proposal introduces an interesting way to do it.

ERC-8021 proposes a way to embed builder codes directly into transactions, combined with a registry where builders can provide wallet addresses to receive payouts.

Implementing it would create a standardized way to add builder codes to ANY transaction - and define a common way for platforms to reward app builders for the transactions they generate.

ERC-8021 consists of two core components:

1. A new transaction suffix: small data that app developers can add to the end of their transactions to include their builder code like “phantom”, “my-app”, or “jarrod”.
2. A “code registry”: a smart contract where developers can map their builder code to a wallet address to receive payouts from platforms.

the builder code can be added to the end of the transaction data - and optionally maps to a wallet address for payouts.

This would allow any platform to attribute on-chain activity back to the app that originated it, and distribute revenue directly to those builders in a transparent, programmable way.

Closing thoughts

Hyperliquid enjoyers are likely already familiar with builder codes, but I was honestly mindblown when I dug deeper into it and realized how widespread their adoption has become in a short time period.

And it’s obvious why it’s so successful - builders get rewarded for creating quality consumer-facing apps built on some of the most powerful primitives that crypto has to offer.

Ethereum has a huge pool of existing quality platforms that could integrate into a standardized builder code system to foster a new wave of consumer-friendly apps.

Builder codes unlock new revenue streams for quality app builders that aren’t based on what conference parties they got grants from - but rather the amount of value they provide to users.

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