NEW YORK — A new study from researchers at Stanford University and Columbia Business School is putting a spotlight on one of the least visible costs of the cryptocurrency trading boom: the fees paid by retail traders chasing leveraged bets around the clock.
The research examined trading activity on Hyperliquid, a major decentralized trading venue, over a 15-month period.
Its finding is striking.
Wallets identified by the researchers as front-end traders, whom they interpret as predominantly retail, accounted for about 41% of trading volume across 10 of Hyperliquid’s highest-volume perpetual contracts—but generated more than 80% of the fees analyzed.
The numbers don’t mean that every retail trader lost money.
They do, however, show how trading costs can become a major component of retail losses when leveraged, high-frequency trading and repeated transactions are involved.
The $1.11 billion question
The researchers estimate that the retail cohort lost approximately $1.11 billion over the 15 months studied.
Of that amount, about $725 million was attributed to trading fees.
Another approximately $226 million resulted from forced exits, while about $154 million came from voluntary trading losses, according to the study.
That breakdown is important because it challenges the simple idea that retail traders necessarily lose primarily because they consistently bet on the wrong direction.
The study suggests that the cost of trading itself was the largest component of the estimated losses.
In other words, even before asking whether a trader correctly predicted Bitcoin, Ethereum or another asset, there was another bill to pay: entering and exiting leveraged positions.
Why Hyperliquid matters
Hyperliquid has emerged as a major venue for cryptocurrency perpetual futures.
Unlike traditional futures contracts, perpetual contracts generally have no fixed expiration date, allowing traders to maintain leveraged positions as long as they meet the platform’s margin requirements.
That makes them attractive to traders looking for highly leveraged exposure to crypto prices.
It also creates a market where trading can continue around the clock.
Bloomberg Law described perpetual contracts as a growing part of the crypto market’s 24-hour leveraged-trading ecosystem.
The researchers selected Hyperliquid because its blockchain-based trading records provide unusually detailed data.
That on-chain record allowed them to examine activity at the wallet level rather than relying only on aggregated exchange statistics.
How researchers identified retail traders
This is one of the most important details readers should understand.
The researchers did not simply obtain a database labeled “retail investors.”
Instead, they classified wallets according to their trading behavior.
The paper calls one group front-end traders and interprets them as predominantly retail.
That means the study’s conclusions should be described as applying to the researchers’ retail-like or front-end trading cohort, rather than every individual retail investor using Hyperliquid.
This distinction matters because professional market makers, algorithmic traders and other sophisticated participants can also interact with decentralized trading platforms.
Fees—not just bad bets—drove the losses
The most striking part of the research may be the size of the fee bill.
The study estimates that fees accounted for approximately $725 million of the retail cohort’s $1.11 billion loss.
That means fees represented roughly two-thirds of the total estimated loss.
The researchers also found that retail trading flow tended to follow recent returns. In their analysis, retail traders were more likely to trade after price movements had already occurred, while the price impact of their voluntary trades subsequently diminished.
That pattern provides another possible explanation for why the trading activity was costly.
A trader may see a large move, enter a leveraged position in response and then pay transaction costs to enter and exit.
If the price subsequently reverses—or if the position is forcibly closed—the trader can suffer losses from both the market move and the accumulated costs.
The hidden price of leveraged crypto trading
Perpetual futures can amplify both gains and losses because traders can control positions larger than the capital they initially put up.
But leverage is only one part of the equation.
Every transaction can carry costs, including trading fees and, depending on the product and position, funding-related payments and the effects of execution.
The Stanford-led research focuses specifically on the costs observable in its Hyperliquid data.
It does not establish that fees alone explain why retail traders lose money across the entire cryptocurrency industry.
That broader conclusion would require comparable data from other exchanges and markets.
Another study finds retail crypto trading can be expensive
The Hyperliquid research is not the only recent academic work examining the cost of retail crypto trading.
A separate 2026 study titled “The Actual Retail Price of Crypto Trades” examined hundreds of cryptocurrency trades across major exchanges and compared their execution costs with several benchmarks.
The researchers found that effective spreads at the exchanges they studied ranged from approximately 253 to 834 basis points, concluding that retail crypto trading costs could be economically significant and may be underestimated by conventional benchmarks.
The studies use different methods and examine different parts of the crypto market, so their results should not be treated as interchangeable.
But together they point toward a common issue: the headline trading fee displayed by an exchange may not capture the full economic cost of a trade.
The cost can extend beyond the advertised fee
For ordinary investors, “fee” can sound straightforward: pay a percentage, execute the trade and move on.
Actual trading costs can be more complicated.
A trader may encounter:
- explicit trading commissions;
- bid-ask spreads;
- execution costs;
- funding payments on perpetual contracts;
- liquidation-related losses;
- and the cost of repeatedly entering and exiting positions.
The Stanford-led Hyperliquid paper concentrates on the costs and outcomes observable in its dataset, while the separate retail-trading research examines effective execution spreads.
That difference is important when interpreting the numbers.
Why the findings matter as crypto expands
The research arrives as crypto derivatives continue to become a major part of digital-asset markets.
Hyperliquid itself has grown into a significant venue for perpetual trading, while other major exchanges and financial companies are expanding their derivatives offerings.
On September 18, The Block reported that Hyperliquid’s HYPE token rose above $90 as the platform introduced manual borrowing against HYPE and Bitcoin, highlighting the continuing expansion of activity around the ecosystem.
At the same time, traditional financial firms are increasingly moving toward crypto derivatives and tokenized markets.
That makes the question of trading costs increasingly relevant—not only for crypto-native traders but also for investors entering digital assets through more familiar financial platforms.
What the study does—and does not—prove
The findings are significant, but they need to be kept within their boundaries.
The study does show:
- a large retail-like trading cohort was responsible for about 41% of volume in the selected Hyperliquid contracts;
- that cohort generated more than 80% of the fees analyzed;
- researchers estimate the cohort lost approximately $1.11 billion over 15 months;
- about $725 million of that estimated loss was attributed to fees.
The study does not show:
- that every retail crypto investor loses money;
- that all crypto exchanges have the same fee dynamics;
- that retail investors always lose to institutional traders;
- or that cryptocurrency trading is inherently unprofitable.
It is a detailed case study of trading behavior on one major perpetual-futures venue.
A warning for the 24-hour trading generation
The bigger story may be less about cryptocurrency itself and more about how modern markets are changing.
Traditional stock markets operate within defined trading sessions.
Crypto markets never really close.
That means a trader can react to a price move at almost any hour, open a leveraged position, close it minutes later and repeat the process dozens—or potentially hundreds—of times.
The technology makes that possible.
But the study suggests the economics of constant trading deserve just as much attention as the technology.
A trader who focuses exclusively on whether an asset goes up or down may overlook how much is being paid simply to participate.
The question investors may want to ask before the next trade
Crypto’s promise has always included faster markets, global access and fewer traditional financial intermediaries.
But the Stanford-led research highlights a different side of that revolution.
Access is not the same thing as cheap access.
For retail traders, the crucial question may not simply be:
“Will Bitcoin go up?”
It may also be:
“How much am I paying to keep making that bet?”
Because according to the new research, the answer to that question could determine a surprisingly large share of the final result.
