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Avail launches tool to protect Hyperliquid traders from copy trading
Avail has introduced ShieldTX, a service that allows Hyperliquid traders to conceal the link between their trading positions and primary wallets. According to the developers, bots copying trades increase costs for large traders on the platform by an average of 0.63% per transaction.
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The new tool is designed for perpetual futures trading and automatically creates a separate wallet for each position opened. This makes it more difficult to track an individual user's trading activity and replicate their strategies.
ShieldTX primarily targets large traders, investment funds and trading firms. The service uses Nightshade, a privacy infrastructure developed by Avail using zero-knowledge (ZK) proofs.
How ShieldTX protects trades on Hyperliquid
Copy-trading bots monitor traders' public wallets and can open similar positions within seconds. According to Avail, this activity can worsen execution prices for the original orders.
The developers examined 332,317 wallets that traded on Hyperliquid over a 30-day period. For a more detailed analysis, they randomly selected seven traders from the platform's top 100 and examined 25 addresses for each trader that were suspected of copying their transactions.
Wallets were classified as potential copy traders if they replicated trades involving the same asset and direction within 60 seconds on at least 10 occasions. After accounting for position sizes and volatility, researchers estimated the median additional cost for tracked traders at 63 basis points, or 0.63%, per trade.
ShieldTX holds deposited funds in a smart contract on Arbitrum. When a position is opened, the system creates a new Hyperliquid wallet. Once the trade is closed, the funds are returned to the user's protected balance.
The positions themselves remain public, but they cannot be directly linked to the trader's original wallet through blockchain data. Users also retain access to their transaction histories for auditing and regulatory compliance purposes.
Closed testing of the service began in July. According to Avail, 75 traders participated, executing approximately $50 million in trades and creating more than 3,800 wallets.
Polygon co-founder and Avail CEO Anurag Arjun said participants managed to avoid being tracked by bots. However, the company did not provide comparative data on trading costs before and after using ShieldTX.
Access to the service is being expanded through invitations. Its primary target audience includes wallets with trading volumes of at least $500,000, as well as applications integrated with Hyperliquid.
Hyperliquid prepares to expand into the U.S. market
Meanwhile, the Hyperliquid ecosystem is exploring opportunities to enter the regulated U.S. cryptocurrency derivatives market. Under the HIP-3 upgrade, Kraken's parent company, Payward, could become the first operator to deploy trading markets under the supervision of the U.S. Commodity Futures Trading Commission (CFTC).
The initiative is expected to use Bitnomial's infrastructure. If the necessary approvals are obtained, it could give U.S. traders access to perpetual futures linked to the platform through a regulated trading model.
Earlier, we reported that Hyperliquid representatives described on-chain perpetual futures as a challenge to Wall Street's traditional capital
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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