Double the HYPE? 21Shares Files for the First Ever 2x Leveraged DeFi ETF in the U.S.

21Shares’ Bold Move: How the 2x HYPE ETF Could Transform DeFi and Leveraged Crypto Trading

A new wave of financial innovation could soon hit Wall Street as 21Shares, one of the world’s leading crypto-focused asset managers, files for a 2x leveraged HYPE ETF with the U.S. Securities and Exchange Commission (SEC). The proposed product aims to double the daily performance of the Hyperliquid Index, marking the first time a U.S.-listed exchange-traded fund (ETF) would track a live decentralized finance (DeFi) protocol.

If approved, this would not only redefine how traditional investors gain exposure to DeFi, but also highlight the growing convergence between conventional finance and blockchain-based trading systems. The move reflects a continued expansion of 21Shares’ portfolio, which already includes Bitcoin, Ethereum, and even DOGE-backed ETFs across various global markets.

A New Frontier in DeFi Investment

The 2x HYPE ETF is designed to amplify investor exposure to the Hyperliquid ecosystem, a fast-growing Layer 1 blockchain and decentralized perpetual futures exchange. The ETF will use financial derivatives to deliver twice the daily return of the Hyperliquid Index, offering a new kind of leverage-based crypto exposure for U.S. investors.

This approach is similar to how traditional leveraged ETFs operate in the stock market—by using swaps and futures contracts to multiply daily gains (or losses). However, applying this model to a decentralized protocol is groundbreaking. It offers institutional investors a way to participate in DeFi growth without directly holding or managing tokens on-chain.

Bloomberg’s senior ETF analyst Eric Balchunas described the filing as “so niche it might just win,” referencing how specialized financial products—like smart beta and currency-hedged ETFs—eventually became major investment categories after starting small.

For traders and investors, this ETF could serve as a bridge between DeFi and Wall Street, blending regulated financial structures with the open innovation of blockchain technology.

How the 2x HYPE ETF Works

Unlike traditional ETFs that hold the underlying asset directly, the 2x HYPE ETF will use Hyperliquid’s perpetual futures market to replicate the performance of its index. The product will operate within a 40-Act daily-reset structure, ensuring it complies with established U.S. financial laws while maintaining daily recalibration to meet its leverage target.

The fund will rely on swaps instead of direct token custody, a method that introduces additional funding and counterparty risks but provides operational efficiency and regulatory clarity.

According to early projections, the ETF’s initial fund capacity could range from $500 million to $1.5 billion, depending on Hyperliquid’s overall liquidity and institutional demand.

Experts caution, however, that leveraged ETFs are inherently riskier due to their daily compounding effect. Gains can be amplified—but so can losses. Therefore, the 2x HYPE ETF is likely aimed at active traders and experienced investors, rather than passive holders.

Hyperliquid: The DeFi Engine Behind the ETF

Launched in 2023, Hyperliquid has quickly risen as a major player in decentralized derivatives trading. The project’s HYPE token serves as its utility and governance asset, offering holders trading discounts, fee reductions, and participation rights within the protocol.

Hyperliquid differentiates itself by combining the transparency of blockchain with the speed and depth of centralized exchanges. Its on-chain matching engine allows near-instant settlements, while its decentralized nature ensures full user control over assets.

In recent months, Hyperliquid has reported record trading volumes and a surge in user activity, drawing attention from both retail traders and institutions seeking alternatives to centralized exchanges.

This momentum has positioned it as one of the leading DeFi platforms in 2025—right when interest in tokenized assets, RWAs (real-world assets), and decentralized liquidity is growing exponentially.

21Shares Expands Its DeFi Portfolio

The move toward a leveraged DeFi ETF aligns with 21Shares’ broader strategy of bridging traditional finance and blockchain technology. The Switzerland-based firm already operates numerous crypto investment products in Europe, including the HYPE ETP listed on the SIX Swiss Exchange.

That European launch was a success, providing institutional investors a regulated entry point into the Hyperliquid ecosystem without the need for crypto wallets or direct token custody.

21Shares’ recent filings also include ETFs for Bitcoin, Ethereum, and Dogecoin, demonstrating its push to dominate the crypto ETF landscape. Its partnership with major liquidity providers and custodians ensures that each fund adheres to institutional-grade security and compliance standards.

The proposed 2x HYPE ETF would be a logical next step—offering exposure not just to crypto prices but also to DeFi’s on-chain yield and trading mechanisms.

Global Demand for DeFi Exposure

The filing comes at a time when global interest in decentralized finance is accelerating. As institutional investors look for yield beyond traditional markets, DeFi protocols like Hyperliquid, Aave, and Lido have become attractive alternatives.

Meanwhile, rival firms such as VanEck and Bitwise have also moved aggressively into the space. Bitwise’s Spot HYPE ETF aims to hold tokens directly, while VanEck is preparing a staking-based ETF that would distribute yield to investors.

Together, these filings signal a growing trend: institutional DeFi adoption. The fact that major asset managers are competing to bring decentralized products to U.S. markets underscores the industry’s maturation.

The Road to SEC Approval

Despite the excitement, approval from the SEC remains uncertain. The regulatory body has historically taken a cautious approach toward crypto ETFs, particularly those involving derivatives or leverage. However, following the approval of Bitcoin spot ETFs earlier this year, the landscape has shifted.

Analysts expect a lengthy review process, likely involving detailed scrutiny of the ETF’s leverage structure, underlying assets, and risk disclosures. Still, if the SEC grants approval, it would mark another milestone for crypto integration into traditional markets—potentially paving the way for leveraged DeFi ETFs on other protocols as well.

What It Means for Investors

If approved, the 21Shares 2x HYPE ETF could significantly alter how investors interact with decentralized finance. Instead of navigating complex DeFi wallets and liquidity pools, U.S. investors could gain high-yield exposure simply by purchasing an ETF through a standard brokerage account.

This accessibility could attract a new wave of institutional and retail capital into the DeFi ecosystem, driving liquidity and adoption for Hyperliquid and similar projects.

Furthermore, the move could inspire the creation of new structured crypto products, including leveraged ETFs for other major protocols like Aave, Synthetix, and Curve.

Market Impact and Future Outlook

In the short term, market analysts anticipate that the announcement alone could fuel speculative interest in HYPE tokens. If the ETF is launched successfully, demand for HYPE may rise substantially, strengthening its price and liquidity.

Over the long term, this ETF could serve as a benchmark for DeFi-based investment products, showing regulators and investors that decentralized protocols can coexist with traditional financial structures.

Conclusion

The proposed 21Shares 2x HYPE ETF represents more than just another crypto investment vehicle—it’s a potential turning point for DeFi’s integration into global finance. By merging the transparency of blockchain with the accessibility of traditional ETFs, it offers a glimpse into the future of digital asset investing.

If approved, this could mark the beginning of a new chapter in financial markets, where decentralized protocols like Hyperliquid are traded and leveraged just like blue-chip stocks or commodities. For now, all eyes remain on the SEC’s decision, which could either open or close the door to a new era of leveraged crypto products.

Writer @Ellena

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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